The FDIC recently issued FIL-16-2022 alerting institutions to notify the FDIC if they are currently conducting crypto asset, or digital asset, activities or looking to do so in the future. This will allow the FDIC to provide feedback on specific risks, including those related to:
There are new and unique challenges with getting into these types of activities. For example, it can be difficult to even confirm the true ownership of certain assets and there are undoubtedly implications for Bank Secrecy Act programs. There are also special concerns related to information security and technology and credit risk; not to mention accounting, auditing and reporting.
A disruption in crypto-related activities could force the redemption or sale of other assets backing those activities. The risk of operational failures must also be considered.
Customers may easily be confused by the nature of crypto assets and how they’re different from traditional banking products. Institutions must understand risks related to consumer protection, including UDAAP, in offering such products.
With cryptocurrency becoming more common, it makes sense that financial institutions might consider dipping their toes into this area. Thus, we would expect to see more regulatory guidance, etc., on this area in the future. Cryptocurrency is also becoming more mainstream which can directly impact your BSA/AML Program. You don’t want to overlook the potential risks. If you are looking for more, check out our webinar “BSA/AML: Crypto/Virtual Currency” which is available now OnDemand.
Published
2022/05/04