AML and self-regulation as a tool for crypto companies and banks to facilitate their work interaction Adv. Yael Neeman Ben Ari CRO and Compliance Officer Bits of Gold ltd. Former AML Compliance officer in Bank Leumi & Bank of Jerusalem So What banks say? The risk is unmanageable In the next 20 min I will try to prove that the risk is manageable

What banks say? High Risk Activity Unregulated - Money Laundering Impossible to understand or manage the risk No transparency Impossible to understand or manage the source or the destination of the funds Former AML Compliance officer in Bank Leumi & Bank of Jerusalem So What banks say? The risk is unmanageable In the next 20 min I will try to prove that the risk is manageable

Former Fintec State of Mind: Regulation does not allow business Former AML Compliance officer in Bank Leumi & Bank of Jerusalem So What banks say? The risk is unmanageable In the next 20 min I will try to prove that the risk is manageable

Bits of Gold State of Mind: Regulation is Crypto startups’ best friend Former AML Compliance officer in Bank Leumi & Bank of Jerusalem So What banks say? The risk is unmanageable In the next 20 min I will try to prove that the risk is manageable

Bits of Gold is the first to file for FAP license Certification Check-list for risk management Get the Regulator on Board Dialogue regarding the policy and legislation Ability to file SAR reports Former State of Mind Regulation gets in the way of Start Ups, Interferes with grows, Does not allows business New Fintech State of Mind Regulation is Crypto startups best friend – the only way to compete and be provide alternative Set a checklist to risk managers – a frame for resource allocation Government accountability File SARs for risk management purposes BOG firs to receive MSB license & first to file for the new license in Israel

Corporate Governance The Same as The Banks Detailed Policy & Procedures Board & Management Responsibility Nomination of Compliance Officer Annual Risk Assessment External Audit & Compliance Testing Training and Oversight Same as bank

Onboarding Requirements Again- Same as The Banks Thorough KYC & Customer Identification Program Detailed Documentation Requirements “Face to Face” or Technologically Equivalent Authentication Customer Due Diligence Proof for “Source of Funds” Verification of Taxation Compliance Same as bank

Monitoring & Reporting Better than Banks Risk Based Approach Rule and Behavior-Based Transaction Monitoring IP Geo-Location, Device Signature Monitoring Real-Time Analysis, Post-Query Alerts, and Data Points Screening During Onboarding & Prior to Each Transaction Screening Against Sanction, PEP, Blacklists Reporting SAR & CTR to FIU Same as banks FIU- Financial Intelligence Unit – IMPA in Israel

Banking Compliance Doesn’t Have Blockchain Monitoring Real-Time Analysis of the Blockchain Connect Bitcoin Addresses to Real World Services Test Transactions with Bitcoin Exchanges and Darknet Markets Sophisticated In-Depth Real-Time Blockchain Transaction Analysis De-Anonymize Bitcoin Users Used to Identify Illegal Gambling, Dark Markets, Ransomware, Mixers, Fraud Available due to the unique transparency of blockchain As a bank compliance officer I could only dream of this kind of technological functionality

Summary Cryptocurrency risk is much lower than cash Regulators are onboard Embrace technology – RegTech solutions AML risk management with US is equal to the bank’s Cash is untraceable period (no proof of customer statement) – Banks do cash Regulators – US, New York, Gibraltar – new regulator acknowledges the industry every day Bitcoin us based on technology, The answer to technological issues are technological solutions, New RegTech solutions are getting better and better

We Make The Risk Manageable Cash is untraceable period (no proof of customer statement) – Banks do cash Regulators – US, New York, Gibraltar – new regulator acknowledges the industry every day Bitcoin us based on technology, The answer to technological issues are technological solutions, New RegTech solutions are getting better and better

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