Originally featured on Forbes.com for Crowe BrandVoice
Crypto assets might be a brave new world, but financial crime prevention and risk management fundamentals still apply.
As the crypto asset markets evolve and the realization of risk begins to mature, regulators and other stakeholders are placing greater focus on the financial crime risks these assets pose. While novel, the financial crime risks they present are generally like those presented by fiat, or government-issued, currency, such as money laundering, terrorist financing, tax evasion, sanction evasion, and fraud schemes. The familiar framework of source, volume, and movement risks still applies, and when applied effectively, it can help identify trends that might be indicative of failed or failing controls within an organization.
With the increased attention in this space because of failed organizations and recent bankruptcies, risk management of crypto assets is coming into focus, and regulators are actively working to establish a regime for oversight for each of the multiple types of assets. As the standards are set, there is much for banks and financial services organizations to learn as they adapt for a future in which the totality of these assets plays a more significant role in the economy. Fortunately, many of the principles of risk management that apply with fiat currency can be applied to crypto assets, too.