Compliance foundations for virtual asset businesses

Crypto businesses face heightened scrutiny from regulators and banking partners. The building blocks every VASP should have in place.

Virtual asset service providers (VASPs) operate in one of the most closely watched corners of financial services. Global standards — including FATF’s guidance on virtual assets and the ‘travel rule’ — have brought VASPs firmly within AML/CFT expectations, and local regulators continue to develop licensing and supervisory frameworks.

The building blocks

• A risk assessment that addresses virtual-asset-specific risks such as privacy coins, mixers, unhosted wallets and cross-chain activity.
• Robust KYC/KYB with risk-based enhanced due diligence.
• Blockchain analytics to screen wallet addresses and trace the source of funds.
• Travel rule processes for transfers between VASPs.
• Sanctions screening covering both customers and on-chain exposure.
• Clear policies on which assets and services you will — and won’t — support.

Banking relationships depend on it

For many VASPs, the most immediate test of their compliance programme comes not from a regulator but from a bank or payment partner performing due diligence. A well-evidenced programme is often the difference between securing and losing those relationships.

In virtual assets, a strong compliance programme is a commercial asset, not just a regulatory requirement.

Stay adaptable

Regulation in this sector is moving quickly. Build frameworks that can absorb change — with clear ownership for tracking regulatory developments and a process for updating policies and controls as expectations evolve.