Compliance weekly – 31 January 2022

Why compliance is important in the digital asset industry

In this report we observe and track all relevant events that have unfolded in the compliance and digital asset space during the past seven days.


Rugpulls, hacks and bad actors dominate the headlines the past week as there has been scathing developments in various projects as the FUD continues to mount. Check Point Research (CPR) has recently published a piece on how hackers create new fraudulent tokens to lure victims into buying the tokens, and then ‘rug pulling’ all the money from the smart contracts. A recent use case is the Wonderland project where token prices fell as much as 22% after the identity of one of the co-founders was made public. Michael Patryn, an alleged felon who was one of the previous founders of QuadrigaCX, rug pulled the project and cost investors millions. The revelation led to investors losing faith in the project and values previously promised by the core team.   

As BTC remained stable in the US$30k – US$40k margin, Chainalysis has released a preview into their 2022 crime report which indicates that DeFi has taken a larger role in the illicit laundering of money. Even though there has been an increasing trend of bad actors using DeFi exchanges, the majority of money laundering activities emanate from centralised exchanges. As there is a growing interest by hackers looking for new ways to exploit the vulnerabilities of crypto, some calculations have now shown that quantum computing has a long way to go as the tech is still a million times too small to hack blockchain.


The Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) that is the monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism has published a report that focuses on AML/CFT supervision in times of crisis and calls for a rapidly increase digitalization of core functions of supervisors and reporting entities to maintain operational continuity. As BitHumb is under greater scrutiny it has imposed stricter regulations that require its users in South Korea to adhere to KYC checks and whitelist their addresses in order to prevent their crypto withdrawals to be blocked. 

The Association of Certified Anti-Money Laundering Specialists (ACAMS) is being acquired by Wendel and the Colibri Group for a whopping US$500M. This will happen in parallel with the acquisition of Becker Professional Education and OnCourse Learning by the Colibri Group. The CEO of Wendel has expressed his enthusiasm and stated that they ”are enthusiastic about the opportunity to invest in ACAMS, a global leader in training and certifications for financial crime prevention. ACAMS is a successful mission-driven organization aligned with Wendel’s values. As a provider of services that ultimately reduce the funding of terrorism and human trafficking (among other nefarious activities), it fits well with Wendel’s CSR values. The investment represents a new milestone in our 2021-24 roadmap, and our announced target to accelerate the redeployment of our capital toward companies with higher growth rates.”


The Intelligence Fusion and Strategic Ops (IFSO) unit of Delhi Police Special Cell apprehended a group of scamsters who allegedly stole cryptocurrency from a Delhi-based businessman. According to the unit “the cryptocurrencies were routed through various wallets and landed in the suspected wallets. We discovered that one of the wallets, that belongs to the Palestinian origination, has been seized by Israeli authorities for counter-terror financing.” In Canada, US$300,000 have been issued in fines as Canadian officials take down dark web marketplace headquarters located in Montreal. The administrator of DeepDotWeb has been sentenced to 97 months in prison for his involvement in kickbacks from purchases of contraband on Darknet Marketplaces.


With the accelerated growth of the digital economy and the pace of innovation in digital assets, it is important to view compliance with regulatory requirements, AML/CFT risk management, data protection and cybersecurity from a holistic systems thinking perspective. Too often, businesses are caught in a loop of managing regulatory risk instead, in a form-over-substance approach, by accumulating a wealth of KYC information and user data without the proper safeguards, and/or by filing a storm of suspicious activity reports (SARs). Digital assets businesses have an opportunity to build better and more effective systems and we are here to help them.


Rugpulls, hacks and bad actors dominated the headlines the past week, but there are still reports doing the rounds of arrests and fines being issued in the crypto space. We can only do better in the compliance space and ensure that proper governance and policies are in place to protect vulnerable entities in the digital asset space. 

If you have any questions about crypto compliance, please feel free to have a look at our services or contact us to set up a free call to discuss your needs.

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