Joby Carpenter | Source | Global Head of Cryptoassets and Illicit Finance at ACAMS

"Most legitimate exchanges are taking [know your customer] KYC seriously. I don't think that was necessarily the case 10 years ago, but nowadays, it is. On the back of FTX they don't want the SEC and the FCA to regulate them out of existence. They must be completely on this."

The crypto sector is often painted as the weakest link in the fight against financial crime. More recently, it has been accused of posing a risk to financial stability and compromising investor security with its laissez-faire attitude toward cybersecurity. But if you take the temperature of illicit activity linked to the crypto-asset ecosphere, it throws up some sharp contradictions.

These days, simply saying “we don’t bank crypto” is an increasingly hard line to toe given the significant opportunities the underlying technology creates, and the fact that most institutions have some degree of crypto exposure, whether they know it or not.

Banks need to ensure they have appropriate baseline controls in place to identify customers and detect financial institutions’ interactions with emerging payment systems, including the ability to identify and report potentially suspicious activity occurring through the financial institution.