Perianne Boring Talks Anti-Money Laundering Compliance and the Boot Camp Offered at TNABC

Perianne Boring is the president of the Digital Chamber of Commerce. The chamber will be hosting an Anti-Money Laundering Boot Camp at the North American Bitcoin Conference 2015 in Miami on January 16 and 17. Boring took time from her schedule to speak with Cointelegraph about the boot camp and the importance of compliance with AML regulations for companies in the Bitcoin industry.

“[We want] to bring ... costs down and significantly accelerate a company’s understanding of AML compliance.”

Cointelegraph: Please tell us where the idea came from to offer an anti-money laundering boot camp. What was your inspiration?    

Perianne Boring: We hear stories from companies about their efforts to put AML compliance programs in place. Some download programs from the internet and think that they have put in place what they need [in order] to comply with the laws and protect their enterprise. At the same time, we hear from regulators and prosecutors that these efforts are not sufficient.

However one approaches the subject, AML compliance is one of the most challenging kinds of compliance, and events like those in France last week underscore that it will continue to be a high priority.

We see repeated evidence that even the largest of financial institutions have problems “getting it right.” The nascent digital currency and digital asset industry consists of many young and rapidly evolving companies. While the requirements and expectations of our regulatory and law enforcement communities are developing to meet emerging technology, some companies struggle to meet new requirements without draining the capital. Developing and implementing AML compliance programs in this environment can be challenging even under the best of circumstances, and the consequences of not getting it right can be devastating to the company, but also damaging to the reputation of the industry.

In talking with our members, partners and industry players, we found a big demand for high-quality compliance resources at reasonably priced levels. If a company in this space decides to bring in an appropriately experienced consultant who fully understands digital currencies, which laws actually apply to those businesses and how to build an adequate and effective AML compliance, the costs can be substantial. In order to bring those costs down and significantly accelerate a company’s understanding of AML compliance, we are hosting a two-day compliance boot camp. At boot camp, companies can immerse themselves in a laboratory-like setting and work with some of the most experienced AML professionals in the country to tackle some of the most difficult issues these companies will experience. We are charging US$1,345 for chamber members and US$1,495 for nonmembers for the full 16 hours of training.

“Even if you are not registered as an MSB with FinCEN, you should still have an AML compliance program.”

CT: Currently, there are two types of businesses that deal with virtual currencies. The first are those that offer a great deal of privacy to their customers. The second are those who try to offer a wider range of services, such as the ability to move funds in and out of bank accounts. How do AML regulations affect each of these businesses?

PB: What many have failed to understand (and this can be a very costly oversight) is that regardless of whether or company is a money service business (MSB) or not, the federal criminal statutes apply to you, which say that you cannot launder money or assist in the financing of terrorist activity, or aid and abet, or even willfully blind yourself to such activity. Even if you are not registered as an MSB with FinCEN, you should still have an AML compliance program to protect your organization and reduce your liability if money laundering occurs. Likewise, you also should have an OFAC compliance program to protect your company from engaging in transactions with terrorists and other prohibited individuals. According to our survey, 25% of respondents were not even aware of the implications of these provisions.

CT: Coinbase has received a lot of criticism lately about its changes in policies in an effort to stay compliant with both FinCEN and FINRA. Can you explain why the company must make these changes in order to stay compliant?

PB: I can’t comment specifically on Coinbase’s changes, but the harsh reality is that consumers have very little expectation of financial privacy, not only in the US, but in most developed countries. Since 9/11, governments have greatly increased the burden on financial institutions to scrutinize their customers and their transactions for unusual activity. Whether you agree with them or not, these are the laws of the land and if your entity is linked to impermissible activity, the government could seize your assets, throw you in jail, and even go after your family and business partners, if you are not compliant.

“As a practical matter, ... a different standard seems to be in play for Bitcoin merchants.”

CT: Under current regulations, are Bitcoin merchants and exchanges required to conduct more rigorous checks than fiat currency businesses?

PB: No law requires merchants conduct a check of customers using Bitcoin. Likewise, no law subjects merchants accepting Bitcoin to any level of scrutiny greater than those that accept other forms of payment. As a practical matter, however, a different standard seems to be in play for Bitcoin merchants. Regulators and banks look at these merchants with a more jaundiced eye because they don’t trust Bitcoin, even though there is no evidence that Bitcoin is used in more illegal transactions than fiat currency.

For exchanges that are regulated as a result of FinCEN guidelines, they are treated as money transmitters rather than currency exchanges. As a result, they are subject to the more rigorous elements of the Bank Secrecy Act requirements that apply to currency exchangers. However, Bitcoin exchangers may decide to take greater precautions in their transactions because of the speed and distance of the transactions that they are facilitating.

CT: When Bitcoin-based businesses become compliant with regulations, what advantages does that give both the compliant business and the consumers who deal with them?

PB: For businesses, a license gives them a competitive advantage over other businesses because consumers prefer them over nonregulated businesses.  Having a strong compliance program is critically important to establishing and maintaining banking relationships, and finally, avoiding fines assessed by FinCEN, and staying out of jail. Consumers also feel more comfortable with trusting businesses that have consequences if they attempt to cheat or defraud them.

CT: There are still many businesses out there that have chosen to avoid these regulations for the sake of giving privacy to their customers. What will the future hold for these businesses?

PB: I can’t speak to the businesses that are choosing to avoid regulations, as they presumably have counsel that has correctly advised them on the law. If you are referring to AML compliance, they should keep in mind the wisdom of putting an AML compliance program into place. Otherwise, they risk sanctions, including jail time, if they are flagrantly violating the law, and their company is linked to impermissible activity.

“[The boot camp] goes beyond lectures, to hands-on workshops and troubleshooting real-life compliance situations.”

CT: Your registration has three categories. Will attendees be allowed to bring more than one person to their team?

PB: We encourage multiple members of a team to attend. It will only strengthen the compliance culture of the organization. We will give a 20% discount to each additional employee from the same team, and will make special arrangements if four or more from an organization attend.

CT: Will recording devices be allowed during classes?

PB: No. We are bringing a unique learning experience to the boot camp participants. This goes beyond lectures, to hands-on workshops and troubleshooting real-life compliance situations. Participants will receive workbooks and other materials to aid them in creating and maintaining AML compliance programs within their companies.

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