SEC’s Division of Examinations issues Risk Alert on digital assets

The Risk Alert seemed to take particular aim at broker-dealers, who have been “inadequate” in their AML compliance.

The Security and Exchange Commission’s Division of Examinations published on Friday a blueprint for investment managers and institutions on how the division will inspect the handling of crypto assets, or “digital asset securities,” moving forward. 

The division (formerly the Office of Compliance Inspections and Examinations) is the second-largest wing of the SEC and is tasked with overseeing securities industry players to ensure regulatory compliance.

Targeted toward investment advisors, broker-dealers, exchanges and transfer agents, this Risk Alert provided a broad list of specific procedural, bookkeeping and advisory steps the division will be expecting from securities companies in future examinations.

“As more securities industry participants seek to engage in digital asset-related activities, this Risk Alert provides transparency about areas of focus for the Division’s future examinations,” the office wrote.

Investment advisors should be aware of risks associated with forks and airdrops, and the Division will be reviewing advisors’ “fulfillment of their fiduciary duty with respect to investment advice,” a comment presumably related to disclosing the risks associated with crypto.

Investment custodians, meanwhile, should have “continuity plans” in situations where key executives have access to private keys, and the division will be examining private key management going forward.

Among the most thorough sections is guidance around Anti-Money Laundering considerations for broker-dealers, which the division seemed to imply has been a point of failure for some institutions.

“Certain pseudonymous aspects of distributed ledger technology present unique challenges to the robust implementation of an AML program,” the division wrote. “The staff has observed broker-dealer AML programs that have not consistently addressed or implemented routine searches or, to the extent they implemented routine searches, have not updated those searches to check against the Specially Designated Nationals list maintained by the Office of Foreign Assets Control (“OFAC”) at the U.S. Department of the Treasury.”

The Risk Alert also noted “inadequate” AML procedures and documentation, noting that it would be examining for “filing suspicious activity reports and performing customer due diligence.”
http://dlvr.it/RtZhS6

You might be interested in …

UK Judge Rejects US Extradition Requests for Julian Assange, Wikileaks Holds $800K in Crypto

Uncategorized

On Monday, a British judge rejected the U.S. request to extradite the Australian editor, publisher, and activist Julian Assange. Following the U.K. judge’s decision, the current president of Mexico, Andres Manuel Lopez Obrador, has offered Assange political asylum in the country. Meanwhile, Wikileaks has gathered hundreds of thousands of dollars in crypto-asset donations since the […]

Read More

Futureswap V2 wants to offer a home for DeFi whale traders

Uncategorized

The derivatives platform uses AMMs to optimize for large DeFi traders. After the success of the automated market maker, or AMM, model for building decentralized spot exchanges, several projects are now racing to take this concept to the world of derivatives. One of these is Futureswap, an AMM-based futures exchange specifically designed for large trades. […]

Read More

1/18: BTC, ETH, DOT, XRP, ADA, LTC, BCH, LINK, XLM, BNB

Uncategorized

Altcoins are beginning to lose bullish momentum as Bitcoin price struggles to reclaim $40,000. Investors are beginning to worry that Bitcoin’s (BTC) uptrend could be in peril after the top-ranked cryptocurrency failed to pull above the $40,000. Some traders are afraid that a repeat of the crushing 2018 bear market is on the cards again […]

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *

css.php