Proactive regulatory adaptation
Kraken has been proactive in adapting to regulatory changes. For instance, in 2013, when the U.S. FinCEN introduced new guidelines, we delayed our launch to ensure full compliance. This decision underscored our understanding that regulatory adherence is vital for our platform’s longevity.
Investing, upgrading and automating core components of our risk based program – such as BSA/AML, sanctions, governance, transaction monitoring, quality assurance and training programs – has been integral to our global compliance approach.
In 2023, we testified before Congress to describe our risk management, security and client protection standards. We also highlighted potential enhancements within U.S. crypto rulemaking for Congress, citing legislative and regulatory advancements in other developed economies.
Crypto markets transcend borders in ways traditional financial markets do not. Digital assets empower people with new ways to transact in a borderless, real-time and fair manner. We will continue to lend our collaborative voice to the ongoing discussion around effective regulation.
Clear regulatory frameworks will go a long way toward preventing illicit activities, thereby safeguarding the integrity of the crypto market. As part of our commitment, we are implementing global standards such as MiCAR (Markets in Crypto Asset Regulation).
Building trust and transparency
We combine a commitment to following the rules with a deep rooted respect for the trust clients place in us. This means complying with regulations and laws applicable to our business, while actively protecting client privacy and maintaining the highest security standards.
We also continue to lobby for and support candidates who advance laws and regulations appropriate to the crypto industry while challenging proposals which we do not believe make sense.
We prioritize transparency in our compliance processes. As an example of our commitment, we frequently work with law enforcement and regulatory agencies around the world. We provided 2,510 data packages to global law enforcement and regulatory agencies in response to lawful requests for Kraken client data in 2023, demonstrating our commitment to cooperating with law enforcement to advance global crypto adoption.
We do this consistent with strict policies and procedures designed to protect client privacy to the maximum extent allowed by law. You can review which agencies requested data last year in our 2023 Kraken Transparency Report.
Core global compliance practices
Kraken’s crypto compliance program is designed to detect, mitigate and prevent financial crime, market abuse, data privacy breaches and fraud while protecting its clients and, more broadly, the crypto markets.
Our best in class Compliance team applies data driven, risk based solutions leveraging automated “regtech” to our policies, procedures and controls. Our Board of Directors and executive management set a “tone from the top” and oversee our program.
Our program consists of core pillars:
We rigorously adhere to all laws and regulations: This includes AML, sanctions, terrorist financing, markets regulatory, data privacy and consumer protection rules in geographies where we operate to protect our clients and to prevent malicious actors from exploiting our platform. This includes KYC (know your customer) and EDD/CDD (enhanced due diligence/customer due diligence) requirements.
Securing licenses and registrations: We maintain required licenses and work actively with regulators to remain in good standing, underscoring our commitment to lawful operations.
Robust controls and data driven reporting: We continuously strengthen our risk based controls while measuring and monitoring their effectiveness via real time dashboard reporting.
Governance and independent testing: Our governance and controls are subject to risk assessments as well as tested by independent third parties, in addition to internal quality assurance oversight.
Investment in compliance expertise: Our global compliance team includes experts from regulatory bodies, law enforcement and the private sector, ensuring robust and comprehensive practices which undergo ongoing training.
Building a dynamic compliance function fit for the future
Evolving regulatory regimes around the world further punctuate the importance of compliance and its growing role within the crypto industry. New rules mean additional required registrations, reporting and disclosures.
Given this backdrop, we are committed to building a forward-focused compliance function that:
Protects our clients: Our program puts our clients first, protecting their security and privacy. We offer them best-in-class products and services while complying with applicable law.
Anticipates and addresses regulatory changes: We are committed to evolving our compliance strategies to meet current and emerging regulations.
Collaborates with law enforcement: We work closely with authorities at all levels to prevent platform misuse and protect crypto investors.
Engages with industry and policymakers: We aim to shape crypto positive policies that support the growth and innovation of the crypto industry, without imposing undue burden on clients or the sector.
We designed our compliance program to flexibly adapt to dynamically changing global crypto regulations. We continue to scan the horizon to stay ahead of regulatory changes, maintaining a safe and reliable platform that upholds the principles of financial freedom.
The post appeared first on Kraken Blog.
