This week, the U.S. Department of Justice (DOJ) announced the hiring of Hui Chen as a “full-time compliance expert”. In this role, Ms. Chen will be tasked with assessing the compliance programs of companies under DOJ investigation. This information will aid prosecutors weighing criminal charges of companies and individuals, including any remedial compliance measures. As you may recall, Ripple agreed to resolve a DOJ criminal investigation in exchange for a settlement agreement which called for a lengthy series of remedial compliance measures.
According to the DOJ, the hiring of Ms. Chen serves to indicate how serious the Justice Department is taking compliance. (As if the bitcoin community needed a reminder.) Officials, however, were quick to emphasize that a compliance program review is but one of several factors prosecutors will consider. This makes sense. FinCEN, which regulates bitcoin MSBs and conducted the parallel civil enforcement investigation of Ripple, considers multiple factors, including the violations themselves (i.e. volume, severity, time period, etc.); any corrective action undertaken by the institution; self-reporting efforts; level of cooperation with regulators; and, any past history of regulatory exams and prior violations.
It’s unlikely any of these individual factors will be cast aside anytime soon. However, the DOJ has signaled its intention to scrutinize how seriously companies take their compliance obligations, and to what degree the circumstances they find themselves are of their own making. Ms. Chen will, in the words of the DOJ, determine whether a company’s compliance program is “thoughtfully designed and sufficiently resourced, or essentially window dressing”. Now might be a good time to ask yourself which description applies to your compliance program.
Joe Ciccolo is the President of BitAML, a bitcoin compliance company helping BTM operators, exchanges and trading platforms comply with FinCEN and state regulations. Joe is a seasoned AML expert having worked for both large and mid-sized financial institutions before defecting from legacy banking. He can be reached anytime at [email protected].