CVA Podcast: Ekaterina Anthony, gwp

Transcript

[Music] hello hello this is your host shiraz ahmed ready to kick off another bite size episode of the crypto valley association podcast a special thank you goes out to script for supporting us now let's discover together the growing trends of this fast-moving space and try to shed some light on the mysteries it contains we are joined by ikatarina anthony senior manager at gwp leading advisors to financial service providers on the fulfillment of financial market regulatory requirements and the optimization of compliance and risk processes so let's dive straight into the hidden world of compliance

and risk ekaterina thank you for joining us how are you doing hi shiraz i'm doing great and it's good i'm glad to be here today and share my story with the crypto valley association community i know that crypto valley has growing fast internationally and people listen to us not only in switzerland but in many other countries i also believe that switzerland has a very crypto-friendly regulatory and business ecosystem and our local experience could be useful to the countries where the developments just started yeah no it's true we have a lot of different listeners uh from all over the world so i'm sure they're going to be very happy to hear what you have to say today yes

let's let's dive straight in and maybe you can tell us what makes you so passionate about compliance and digital finance so i decided to call my topic today compliance and digital finance sunrise or last mile and the current developments of the financial industries closely depends on regulation and if you know the most cases when you will develop your financial products or services and not only in financial area also in other industries in this areas you cannot just launch something on a global scale we see companies like facebook and libre case where they will have to gradually step by step and reduce libra coin in different jurisdictions

so the scalability issue is one of the main hindrance in developing crypto projects i call it last mile problem you can launch your project because you have technology ready but you actually cannot because of the regulation and cross-border issue and it's probably the most painful topic for the startups this is compliance and i will come back later to sunrise problem in my discussion today and it's actually the same as uh last mile let me say some facts about myself i have economical background and master degree in finance for the last year 10 years i'm living here in switzerland and before i used to live in london

in moscow till 2015 i was manager for the russian stock exchange and its international business activity out of london and before my role was also with the global standard and flood standard and force and flat commodity real-time pricing agency where i was dealing with infringement virus and illegal use of information so i have a lot of experience in the financial area and compliance area and if you ask me how i actually came to the bitcoin developments i would say i'm not an early adopter but still i believe i am as since 2016 i actively involved

in crypto-related businesses it's very very interesting that you point that out and i'm very much looking forward actually to hear more about the the last map problem and sorry for for cutting you off but i think you can call yourself an early adopter because i mean 2016 is still four years ago so maybe you can tell us more about how how you got into to to the blockchain technology in this space well my real experience started as i said in 2016 when i was working as an independent consultant in some portfolio creation of hedge fund with a strategy exposed to crypto market i had a client who really wanted to have a crypto fund with the crypto strategy and i had to learn it from scratch

so it was not in a difficult portfolio because we had only you know exposure to the tokens but later i got another client and he asked me to create a hedge fund a proper crypto hedge fund with within the existing institutional infrastructure in a real banking sector so it was almost mission impossible because you have to find administrator you have to find bank and auditor and it's uh when you talk to administrator about calculating net assets valuation in crypto they just don't want to talk to you anymore and also if you want to open account for such structure it's almost impossible and

auditor they have no experience and they will probably ask you to pay twice more and they will start learning review so but i was able to create the structure and as i already mentioned i used to manage stock exchange business and i start i started to look at crypto trading strategies and crypto exchange structures so i concluded that there are many similarities in trading crypto and fiat instruments at the same time my impression was that the crypto exchanges were in a very initial stage of developments with proper i.t setup reliability security the speed of trading so the compliance part

also was far away from the standard kyc and ml procedures and we can talk about exchanges a lot and it probably should be separate podcast so today of course many of them much improve the onboarding setup and become more scalable okay that's it's very interesting yeah it's a lot a lot to say so let's get straight into it maybe you can tell us more about your current activities at gwp and what role they play within this growing industry actually we in give a pair a fast-growing consulting company with a focus purely on compliance and regulatory matter and licensing we also provide activity in developing digitalization models for

the modern banking sector and support fintech startups created just five years ago by alex guys booler and weber today cavape employs almost 100 professionals in switzerland liechtenstein and germany with offices in swedish zuk geneva vaduz and frankfurt we don't provide tax services so companies set up where purely focus on compliance okay but there's there's definitely a lot to do on the compliance side so maybe you can tell us how that trend is is moving nowadays and and changing how everything is operating yes it's important to build a business right from the beginning especially in crypto related models as the regulator monitors a sector with greater attention

we have experience and know how to support the projects to go live and to be successful for example sierra ba bank was one of our project where we provided support in getting fema banking license it took us around one and a half years to go through the whole licensing journey the biggest part of our offering is the education of the market and supporting clients optimization processes we believe that the evolution of banking sector has already started and you can probably postpone the development but you can't stop it for sure a good example is the interest from even three sentinel banks who are now open for discussion and digitalization advice

i tell you from my experience when in 2017 i was at banking conference in surich and people ask me what i'm doing and what i why i am in this conference as soon as they found out that i involved in crypto they immediately took a distance like today we keep the distance because of corona but as i said today we have very different situation and we see interest from all financial market participants okay i i definitely see and can you tell us maybe the importance of mitigating uh the risk well it's clear that transactions with crypt assets are getting more widely adopted but at the same time it forces the regulators to implement the requirements and rules to control money for

and legality of these transactions so how to find the right balance how not to kill the idea of anonymity but comply with the law but how to make sure that the data are kept confidential so every bank every exchange for broker need to look at the mitigating risk associated with virtual currencies the risk is not unique and it's very similar to the fiat related transactions any financial institution which is considering operations of virtual currency must be ready to answer the key questions what is the baseline baseline controls do they have in place to identify customers what type of customers do they have how does the financial institution interact with other virtual asset providers

and does the organization have the tool to identify and report potential to species okay we'll definitely get into those as well but maybe you can tell me a little bit about where you think uh compliance within the sector as a whole is headed i think client identification became one of the most important topic for business in 2020 and maybe you know financial action task force it's a global organization actually controlling the implementation of the regulation rules in different countries uh proposed in june 2019 a global standard regarding sharing the beneficiary and originate information between

intermediaries operating with crypto assets so-called vast virtual asset service providers this standard is supported by the implementation of the travel rules and the travel rules names is coming to us from 1996 when it was introduced by the financial crime enforcement network vincent in in usa this fund transfer rules are designed to help law enforcement agencies to detect investigate and prosecute money laundering and other financial crime by preserving an information trail it's important to mention that recently adapted standard ivms 101 should be also

probably taken into consideration by our listeners and because it's based for the development of the travel rule protocol and would you like to tell us a little bit more about the importance of knowing about this new swift standard sure i think it's pretty well described already in different media and internet and uh probably just for information it's important to know that it was created by joint working group an international industry coalition established by blockchain organization adaxa gdf and chamber of digital commerce where they adopted this unify cryptocurrency messaging standard to have digital asset service providers

comply with incoming regulation so this standard is supposed to set up a uniform model of data to be exchanged by and it's similar to swift messaging standard i think it's probably confusing for listeners to hear all the names but it's important to be aware to be aware of what is going on in the industry okay i see and following from that where is it headed further it can can you maybe give us further insight into that yes it's actually uh happening right now and because of these requirements of fatf since summer 2019 many developers and companies have been

focused on implementing a solution or protocol to accommodate closely with fatf recommendations in most cases there are no central body organization behind the protocol but rather a variety of leading industry participants from around the world for example our openvas protocol in switzerland or trp protocol or treza despite all protocols developers having a similar aim to create a simple solution that will not impose unnecessary additional requirements integrate into existing business solution and enable interoperability the chosen approaches differing at school architecture and philosophy if you ask me the difference between

them we don't have much time to go into details but it's still important to look at the decentralization aspect blockchain relevancy complicity of authentication and transmission layers and windows pair published recently analytical report comparing different protocols and the famous of course to educate our clients market participants to give them opportunity to understand which actually solution they have to implement what will be the best for them and there are several leading developer developers and companies who already presented a version of the approach to the market some of them already tested some of them in testing phase and we had a

good news in august where the testing happened also in switzerland in uh between two swiss intermediaries let's call them wasps again they did transaction using therapy protocol and software solution developed by local software developer 21 analytics thank you katrina for that and maybe you can tell us more about what your vision is for the future of this whole industry the good news that since 2016 we see a lot of developments and today it's completely different situation with financial intermediaries offering better support to crypto related businesses for example we all know we have two crypto banking switzerland seba and

signo and hopefully bitcoin swiss will join them as a bank and will support the local international crypto operators by creating crypto related structure i learned a lot and i think it was the most sophisticated learning time for me in my entire career at the same time i started to be more involved in consulting and my clients suggested they will pay me my honor in ethereum you know first time when i heard that i was really shocked but quickly i learned how to open my first account with crypto exchange and issued my first invoice so somehow the invoice ethereum was the first milestone in my crypto career meanwhile i started to get

myself more involved in crypto community in switzerland and find out about crypto valley association so became a member and gradually expanded my network at the same time i started to consult different companies on crypto compliance licensing and structuring business in may 2019 i joined gevape guys boulevard partner where as you already mentioned i focus on compliance and crypto and guilty business you know i would like to stress shiraz that crypto valley association gave me a lot of opportunities to meet new people to learn about crypt to exchange experience and to have possibility to present the vision

from the conference floor and even promote myself and my employer today we are corporate members of crypto valley association well thank you so much for for those kind words and uh yes it's great to have uh gwp involved and have you speak at some of our conferences um as well so maybe you can tell us a little bit more um about gwp and their role in this growing industry perfect and so then we can continue towards the end as well i think we spoke about where where the sector as a whole is headed and now we just need to have what is your vision for the future of this whole industry right today we talk about compliance and we

talk about particular topic transactions and travel rules so if you look into the future of industry let us say in a year time it's important when financial intermediaries implement travel resolution on company level and regulators adapted on the country level requirements the majority of big players like exchanges will for sure comply with the rules in case your organization is not part of the tribal compliance you will be out of the game as non-transfer will be possible with non-cooperative countries and i would like to stress that swiss regulation is more advanced in comparison with other countries and it's we still call it sunrise issue you

remember at the beginning i talked about my uh last mile problem so the clients of the countries with less strict regulation will have a problems sending transactions to swiss based participants swiss high standard regulation implies some complicity to swiss intermediaries as well so to cooperate with other jurisdictions they will have problems to actually send money for the clients abroad there are not many jurisdictions who introduce similar high standards the exception could be probably singapore okay that's uh that's very interesting and hopefully we'll see further improvement within that and it's been a pleasure to have you on

today and and to really thank you for the valuable insights that you've provided is there anything else that you'd like to share with our audience before we finish off today yes sir us i would like to thank you again for inviting me and gave a pair to talk about industry topic and especially compliant compliance today we and being a member of crypto valley association actively participate in the supporting of the developments and educating the market and we are active member of the iml task force and i personally represent crypto valley association in adaxa international digital assets exchange association one which is also helped to create ivms 101 protocol which i described before

in case any of our listeners participants need help with travel implementation please do not hesitate to contact us you know the future is starting now don't miss your opportunity and be compliant and you can probably postpone the developments but you can't stop it so thank you so much and all the best and stay healthy in such a difficult time well there you have it it's best to be compliant and don't postpone it it's very important and if you've enjoyed this conversation feel free to check out more on our website cryptovalley.swiss where we host plenty of events educational content and even provide information on how you can join our growing community so thanks again katrina for joining us

stay tuned stay safe and until next time from the crypto valley in switzerland bye-bye