According to a report published by NIGMA, Lebanese-French fintech startup which develops cryptocurrency AML compliance and blockchain investigations tools, if 2020 is a year of uncertain outcomes for cryptocurrencies, it is also clearly the year when regulators are making sure that all businesses and banks are implementing strong standards and policies to mitigate their risks.
In an effort to seek clarity and avoid high non-compliance fines, NIGMA has released research papers on the impact of such a new regulation, with a focus on Middle-Eastern blockchain and cryptocurrency ecosystems. Mapping public and private actors of this sector as well as the legal frameworks in countries of the region, NIGMA has identified that 8 out 13 of them have banned cryptocurrency services or trading. Conversely, “the UAE and Bahrain have implemented a solid compliance framework for regulated entities, while the Capital Markets Board of Turkey has recently announced it is developing its own guidelines”. For this reason, these three countries host most of the 30 digital asset service providers identifies by NIGMA in the Middle-East, with the UAE being the most forward-thinking in its approach to future financial technologies.
According to Fabien Tabarly, CEO of NIGMA, “Anti-Money-Laundering compliance is the main challenge for cCrypto businesses and banks in 2020”. Implementing strict Know-Your-Customer, AML and due diligence procedures — both in fiat money and digital assets — has a cost and may hamper startups and small companies in their development, but it is a necessary step to make the blockchain a safer place and attract institutional investments.
As part of the AML standards, virtual assets service providers and banks need to conduct KYC and due diligence, appoint a Money-Laundering Reporting Officer (MLRO) and report suspicious transactions to the national regulator. To help actors of all sizes in their compliance effort, NIGMA has developed exhaustive and affordable blockchain investigation tools to onboard clients, monitor transactions, trigger alerts on risky behaviors, file Suspicious Activity Reports and investigate scams and hacks. Based on clear and dark web big data analysis, the e-NIGMA solution tags millions of addresses with their real-life owners and facilitates the work of compliance officers or law enforcement investigators.