Crypto Compliance Officers Face Increased Pressure
Increasing focus on the cryptocurrency industry has put new pressure on crypto compliance officers and legal professionals, who worry regulators will hold them personally liable for problems at their companies.
That’s according to a report Monday (Aug. 8) from the Wall Street Journal, which noted that these professionals face greater risks of personal liability while lacking the resources available to people at larger financial firms.
“There’s more risk because there’s no clear rulebook,” Jeff Horowitz, chief compliance officer at Palo Alto, Calif.-based crypto depository BitGo Inc., told the Journal.
Horowitz is a 25-year veteran of more traditional firms, such as Bank of New York Mellon Corp.’s Pershing LLC. He said crypto compliance professionals must balance complying with the rules while dealing with the pressure to take risks to help businesses grow.
He added that many businesses in the sector “operate from a startup mindset.”
According to the Journal report, the Financial Industry Regulatory Authority in March delineated the potential liability of chief compliance officers, saying it would only take action against chief compliance officers who failed to carry out specific oversight duties established by their companies.
Read more: Robinhood Crypto Unit Fined $30M for AML, Cybersecurity Breach
This comes as cryptocurrency companies face increased pressure from regulators. Last week, the New York State Department of Financial Services (NYDFS) fined the cryptocurrency trading unit of online brokerage Robinhood $30 million for alleged violations of anti-money laundering (AML) and cybersecurity regulations.
The enforcement action — the first against a crypto company by the NYDFS — said Robinhood Crypto “failed to maintain and certify compliant anti-money laundering and cybersecurity programs.” The regulator also ordered the company to retain an independent consultant to evaluate compliance.
The NYFDS determined that Robinhood Crypto triggered “significant errors” that led to “deficiencies in the company’s management and oversight of its compliance programs.” .
Read also: Sen. Warren issues Rallying Cry to counter Crypto’s influence over banks
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