Last week, I've posted
here about our conversation with Stephanie Feldt, Chief Compliance Officer & General Counsel at Trading.com.
Today, I’ll share insights provided by Shelley Schachter-Cahm, Chief Compliance Officer at CEX.io. She has a vast experience in Financial Services compliance, ranging from banking to payments, and now crypto.
The role of compliance
We asked Shelley how compliance can help the crypto industry be seen with credibility by consumers, regulators and other stakeholders. According to her, compliance is a hallmark of quality. It provides consumers with the confidence to build
trust and allows organisations to demonstrate they are able to meet the standards expected from financial institutions. “Compliance’s role is to help with the crypto evolution”, she said.
Regulations: what comes next?
On what to expect from upcoming crypto regulations, she believes there should be no surprises, as there is an ongoing consultation between industry and regulators. She foresees developments around the
Travel Rule and the strengthening of AML protection. There’s potential for some divergence in how countries can deal with each other, in particular with Brexit, i.e., between the Frankfurt and London financial hubs. Crypto-specific regulation should be
underway, as the one-size-fits-all approach doesn’t seem to be delivering great results right now.
With this much change, how do you keep up?
Shelley says, personally, a compliance professional working in crypto should read a lot to keep abreast of so much movement. She advises keeping an eye on your LinkedIn feed, meeting other crypto professionals, joining WhatsApp groups and taking courses.
Corporately, she believes it is important to have people doing this job, not to be caught off-guard. There’s just too much going on and it’s virtually impossible for a compliance officer to fully keep up and hold down a full-time job at the same time.
Mitigating crypto risks
We asked Shelley what organisations can do to mitigate risks associated with crypto. According to her, they can choose the safest route, and take actions such as being registered as a crypto asset company with the FCA, holding an EMI licence, as well as
being listed on the London Stock Exchange. That means they can have a very firm and clear guidance on risk management and hold it at their core.
She believes the risks associated with crypto are the same as those associated with financial services and tech companies, such as IT and data security. However, more than that, companies should be invested in reducing the customer risk and that can be addressed
by having a very vanilla risk profile for the customers, to make sure you know who you're dealing with and feel confident about it.
Another important aspect is educating customers about crypto as part of their customer journey. “If we are not comfortable that our customers know what they’re doing, we wouldn’t possibly allow them to do it”, she adds. That is why companies should adopt
FCA’s financial promotion principles, that translate into clear, fair and not misleading communications.
Bridging the gaps in the organisation
To close our session with Shelley, we asked her for insights on how to work with other internal teams to promote compliance and overcome its challenges. She says it is not about technical compliance. In the end, it boils down to communication. “It is about
communication, and it's about humility and it's about engaging with people who are nothing like you, probably, and accepting that you still need to make yourself understood, and that might be about educating you, not educating them”, Shelley concluded.
In my next post, I will tell you more about our conversation with Livia Benisty, Global Head of Business AML at Banking Circle.