Risk-Based Compliance is an approach where an organization tailors its compliance efforts and resources according to the specific risks it faces. In the digital asset sector, this means implementing anti-money laundering (AML) and know-your-customer (KYC) procedures that are proportional to the assessed risk level of a customer or transaction. It allows for more effective allocation of regulatory resources.
Context
News reports often discuss risk-based compliance as a practical strategy for cryptocurrency businesses to meet regulatory obligations without stifling innovation. Regulators increasingly advocate for this approach, allowing firms to focus their efforts on higher-risk activities. Effective implementation of risk-based compliance is key for platforms operating in diverse and evolving regulatory environments.
Digital asset firms must implement robust sanctions compliance programs, as OFAC demonstrates strict enforcement against crypto transactions in embargoed jurisdictions.
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