Implementing Robust Compliance Programs: Responsibilities, Requirements, and Training in Cryptocurrency AML and KYC Policies

Posted in Crypto Asset Compliance on February 27, 2024
Implementing Robust Compliance Programs

Implementing robust compliance programs is not only vital to ensure adherence to regulatory requirements in the cryptocurrency landscape, but it also serves as an essential mechanism to protect businesses from financial and reputational harm, fostering a culture of integrity within the organization.

The compliance function is primarily responsible to implement the Board-approved robust Compliance Program, and its components, such as the compliance policy, cryptocurrency AML, and KYC policies, etc. 

The compliance program including the policies must be prepared under the supervision of the CCO and needs to be reviewed and approved by the Central Compliance Committee (CCC) and the Board of Directors. Compliance Policy is a written methodology outlining the obligations applicable to the business under the relevant applicable regulatory requirements and its associated regulation.

Compliance policy is detailed in the form of Compliance Procedures, which outlines the process and controls designed and implemented in various processes and departments, to ensure that regulatory requirements are complied with. 

Implementing Robust Compliance Programs

Implementing Robust Compliance Programs

AML Requirements Related to Compliance Policy and Procedures

The compliance policies and procedures must be:

  • Written and should be in a form/format that is accessible to its intended audience;
  • Kept up to date (including changes to legislation or your internal processes, as well as any other changes that would require an update); and
  • Approved by a senior officer, of the entity.

Cryptocurrency compliance policies and procedures should be made available to all the employees, who deal with onboarding cryptocurrency clients, establishing relationships with clients, being involved in the execution of transactions, and other activities.

Key Components of Compliance Program

Compliance program, including policies and procedures, should cover at minimum the following requirements:

  • Requirements to have an appointed compliance officer, a risk assessment, an ongoing compliance training program and plan, and a two-year effectiveness review and plan, which consists of a review of your policies and procedures, risk assessment, and ongoing training program and plan;
  • Know your client (KYC) requirements which include requirements for verifying the identity of the client, politically exposed persons (PEPs), heads of international associated organizations, their family members and close associates, beneficial ownership, and third-party involved;
  • Business relationship and ongoing monitoring requirements;
  • Record-keeping requirements;
  • Reporting requirements;
  • Requirements related to suspending or rejecting an electronic funds transfer (EFT) or virtual currency transfer request received; 
Implementing Robust Compliance Programs


As part of the Compliance Program, the financial institutions are required to establish and implement an ongoing employee training program as a part of fulfilling their AML requirements and implementing the Compliance program. Training should include regulatory requirements and the internal AML policies, procedures, and processes. At a minimum, the training program must provide training for all personnel whose duties require knowledge of the BSA requirements.

Training must be provided periodically, such as annually, including the Board members. The AML compliance officers are required to complete an internal AML/CFT certification program, as “knowledge checks” to ensure an understanding of the AML/CFT regulatory requirements. 

Employees may also be trained through additional multiple channels including Web-based training, workshops, and additional courses as needed. The completion of AML training is tracked internally and the failure to complete the required training is taken very seriously and may lead to discipline up to and including monetary penalties and/or job termination. On the successful completion of AML training controls, violations may be reduced.

Implementing Robust Compliance Programs

Final Thoughts

As the digital landscape continues to evolve, the importance of a comprehensive compliance program – including robust compliance policies, AML measures, KYC policies and consistent training – cannot be overstated. The world of cryptocurrency trading, while revolutionary, brings with it a new set of regulatory challenges that require strategic management. Implementing an effective compliance program under the supervision of a competent CCO and with the approval of a Central Compliance Committee and Board of Directors, is pivotal to the success of any financial institution in the crypto space.

The need for continual training, periodical reviews, and detailed written procedures must be taken seriously to avoid costly penalties and to ensure the smooth operation of the business. By taking these steps, institutions can maintain the trust of their clientele, stay on the right side of regulatory authorities, and solidify their position in the ever-evolving financial industry.