Overview 🔎

Global Digital Finance (now GBBC) is the leading global members association advocating & accelerating the adoption of best practices for digital assets. The association members are at the forefront of creating market and conduct standards and best practices for cryptoasset and digital finance participants. Its working groups include subject matter experts across the ecosystem from crypto/digital assets, traditional financial services, legal and academic communities.

The Sanctions Working Group, of which I'm a member, wrote this report. This Working group continuously works on industry-agency engagement on sanctions compliance in the crypto and digital asset industry. The group was launched after the GDF Emergency Summit on Sanctions, where speakers highlighted the need for industry, regulators, and policymakers to work collaboratively to ensure that crypto networks are not misused for sanctions evasion.

Problem & Solution 🤝

The invasion of Ukraine increased the attention on the crypto and digital asset industry’s ability to remain compliant with global sanctions levied against Russia and fears that crypto platforms may undermine government efforts to inflict damage through targeted sanctions. At the moment of the report, the risk of sanctions evasion through crypto platforms was marginal, and firms generally complied with sanctions requirements, though continued vigilance was of paramount importance. This report aimed to undertake the operational components of sanctions compliance in the industry and policy considerations for mitigating sanctions evasion risks further. This report provided tools to regulators and key players in the Crypto industry to improve their Sanctions Compliance controls and policies.

Goals: • To describe the Current State of Legal and Regulatory requirements in the Cryptoasset industry. • To describe the Current Best Practices in Know-Your-Customer (KYC) and Customer Due Diligence (CDD) practices in the Cryptoasset industry. • To identify the Residual Sanctions Evasion Risk with current practices and regulations in the Cryptoasset industry. • To formulate and propose policies to address regulatory weaknesses and mitigate the Sanctions Evasion Risk in the Cryptoasset industry.

Process 🛣

It is difficult to choose the most rewarding and enjoyable aspect of participating in this project: the simplicity and effectiveness of the process or the impactful result.

As far as the process was concerned, it was as simple as effective. It consisted of the following steps:

A Slack group was set up with the members of the Sanctions Working Group.

Two calls were coordinated based on the time zone differences between the members.

The calls' minutes were written with the ideas of topics to cover in the report.

The minutes were merged to produce a tentative outline.

A Google Doc was created where each member was free to add as a suggestion the content that we considered key to add in each section.

The Report coordinators were in charge of filtering, unifying, organizing, and editing the contributions of all the members.

A tentative draft was formed, and a round of observations could be made on it.

After this round of observations, a final content was drafted and approved by most contributors.

The report went to production status, where the design was added and subsequently published on the website and social networks of Global Digital Finance (now GBBC).

Results 🎁

This report's release is the most outstanding achievement of this project. This report was the first production of the Sanctions Working Group and, to date, is one of the only ones of its kind. It provides key information that has been considered by regulators and key global players in the industry.

In addition, it laid the groundwork for future collaboration in this area, which is critical given the ever-changing regulatory environment for the crypto industry, and the accelerated growth of Economic Sanctions globally.

David Carlisle Vice President of Policy and Regulatory Affairs at Elliptic

Takeaways 📣

This report had a very good dynamic of collaboration and teamwork. I liked that I was able to collaborate with dozens of industry experts, and there were no communication problems or obstacles in the process.