Webinar Recap: “AML Compliance Challenges: The VASP Licensing Journey”

Last week Sygna conducted our well-received compliance webinar “Overcoming AML Compliance Challenges: The VASP Licensing Journey”, with a panel that featured representatives of three of our closest clients, strategic partners and associates in Independent Reserve, Chainalysis and Simmons & Simmons. 

The webinar aimed to help virtual asset service providers (VASPs) plan and create the right AML compliance frameworks by identifying specific regulatory hurdles they might face.  While many jurisdictions are struggling to create clear and actionable regulatory guidelines for VASPs to follow, recent developments in Singapore, one of the world’s most progressive financial capitals, were encouraging.

The Monetary Authority of Singapore (MAS) recently commenced awarding in-principle license approval to operate digital payment token (DPT) services to a select few firms, including Independent Reserve, a Sygna Bridge client. Given the global stature and leadership of MAS, we believed there are valuable lessons to be learned from this daunting licensing journey, both locally and globally and decided to center a webinar to address, drawing on the experience of Independent Reserve and other leading compliance firms. 

We’re happy to share that Independent Reserve since announced that it has in fact now received full licensing approval from MAS, making it the first Australian crypto exchange to be licensed in Singapore.

Watch our webinar on demand by clicking here.

Our Panel

  • Raks Sondhi, Managing Director, Independent Reserve Singapore, one of the first VASPs to receive in-principle licensing from MAS and will be sharing key lessons of their journey to Singapore licensing. 
  • Grace Chong, Of Counsel, Simmons & Simmons, a well-established and highly respected international law firm with a strong track record in blockchain-related legal matters. 
  • Sagar Malhotra, Director, Regulatory Compliance and Law Enforcement, Chainalysis, one of the world’s leading blockchain data platforms and also our latest strategic partner, boosting our Sygna Gate and Sygna Hub compliance platforms. 
  • Elsa Madrolle, Managing Director, International, CoolBitX, creator of Sygna, and a leading blockchain security company that builds pioneering and practical crypto asset storage and compliance solutions. 

Webinar Overview

Let’s cover some of the highlights of the hour-long webinar. Please note that this recap is quite succinct and in no way exhaustive, covering only a few of the more salient points. It would be well worth your time as a VASP to watch and review the full webinar in order to get a deep understanding of the issues discussed.

Grace Chong, of Counsel at Simmons & Simmons introduced the panel with a high-level overview of the licensing requirements laid out by Singapore’s 2020 Payment Services Act for the provision of Digital Payment Token Services, including the PSN 01 and 02 notices that provide further guidance. 

Raks Sondhi, Managing Director at Independent Reserve Singapore next detailed his 18-month journey from the 500 CVs received for the recruitment of a head of compliance to having to amend workflows to cater for the Travel Rule. He elaborated on the back and forth with the regulator including what was meant by “interview” and advised not to be shy with giving regulators a lot of information on workflows to facilitate their understanding and maintain a productive dialogue.

What are some of VASPs’ most common pain points?

Elsa Madrolle, Managing Director at CoolBitX followed by covering three of Sygna’s most commonly asked questions from VASPs:

  1. Can you help us with the travel rule questions of our licensing application?
  2. Where are you with interoperability with other solution providers?
  3. Can you help us identify private wallets?

To this Grace added a salient point: MAS will point to enhanced risk-mitigating measures for AML requirements for private wallets but there is ambiguity, as they extracted FATF language and set these as requirements but stopped shy of explaining in great detail how to implement them.

She highlighted the difference between setting expectations and how things are actually done in practice and how it can lead to confusion, pointing to the discrepancy between MAS officers around the use of a Satoshi test (proving ownership of a private wallet) for example. Grace and Elsa then discussed questions around interoperability.

Licensing and blockchain analytics

Sagar Malhotra, Director, Regulatory Compliance and Law Enforcement at Chainalysis addressed the following topics:

  • What are some of the mandatory functions that are required for licensing in terms of blockchain analytics?
  • How do other verticals such as Financial Institutions (FIs) and Law Enforcement Agencies see/treat a licensed exchange versus a non-licensed exchange?
  • With South Korea recently becoming another country in the region regulating cryptocurrencies, what are the risks of implementing such regulatory policies?
  • What is the future of blockchain analytics? 

Why did Independent Reserve choose Sygna as a travel rule protocol?

Raks Sondhi listed the main reasons for their choice of selecting Sygna as a travel rule protocol:

Panel Recommendations

Finally the panellists closed the webinar by dispensing with some recommendations: 

  • Stay on top of regulation as it changes quickly
  • Don’t view licensing as a burden, but rather an opportunity on many levels
  • Have clear parameters and escalation procedures in place and work with top tier staff and firms, internally and externally to form part of your “seal of protection” that the regulator wants to see
  • Start due diligence on service providers early, before the application

Sygna would like to thank our esteemed panelists for their invaluable input and we sincerely hope the information shared is of use for attendees. For any follow-up questions we invite you to get in touch with us, and to learn more about our different compliance solutions such as Sygna Bridge, Hub and Gate.

To watch the full webinar at your own convenience, please visit the link below:

Link to Sygna AML Compliance WEBINAR RECORDING

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