Money Laundering Is a Slippery Slope: Maxim Kurbangaleev on the Crypto Exchange Business After the SUEX Sanctions

Any company wishes to run its business without making mistakes leading to adverse consequences, although it is almost never possible. In September 2021, sanctions were imposed on the SUEX crypto exchange. It was the first case in crypto world history when a crypto company was punished in such a way. We discussed with market expert Maxim Kurbangaleev how to conduct legitimate business in the current circumstances.

Maxim Kurbangaleev: Business under suspicion

The whole cryptocurrency world discussed the situation of the SUEX blocking, trying to understand why the company’s activities had been recognized as illegal. Maxim Kurbangaleev believes that the choice of jurisdiction for cryptocurrency companies is extremely important: “When opening a crypto company, you need to choose the jurisdiction where both the cryptocurrency itself and transactions with it are allowed. The license gives companies the right to legally work with virtual assets, which means that the risk of getting on the sanctions list tends to zero.”

A number of countries license cryptocurrency activities. Each government has its own requirements. In the USA, where cryptocurrency is widely used as a means of payment for goods, services, and real estate, the liquidity of the authorized capital and information about beneficiaries and founders are assessed. There is also a separate type of license for an exchange business, where the purchase or sale of cryptocurrencies for fiat takes place — the “Money Transmitter License”. “In addition to the United States, you can also get a crypto license in Switzerland, where cryptocurrency is legal at the federal level, as well as in the UK, Estonia, and some other countries,” Maxim Kurbangaleev says.

After choosing a jurisdiction, according to the expert, it is important to coordinate activities with the local regulator. Then you should start searching for exchange platforms to buy cryptocurrencies from and sign a contract with them. “I advise you to cooperate only with licensed exchange platforms — this way it is more likely that they comply with the AML requirements of American and European legislation. This is the only way to avoid sanctions and not repeat the destiny of SUEX,” Maxim Kurbangaleev sums up.

Are AML specialists really necessary? – Maxim Kurbangaleev

The opening of fiat bank accounts and the recruitment of AML specialists are the next steps on the way to a legitimate crypto business. Maxim Kurbangaleev pays special attention to the implementation of the AML policy: “The AML staff must promptly identify and prevent the risks of money laundering or other fraudulent activities. In addition to classical procedures, you also need to use special AML services, such as Chainalysis or Ciphertrace, and only then get to work.”

“All clients, without exception, must verify their identity by providing passports and their photos, then AML specialists will be able to run a person through the sanctions lists. But even after that, the cryptocurrency itself must be verified through AML services in order to exclude transactions with illegal funds,” the expert adds.In conclusion, Maxim Kurbangaleev reminds: “One cannot neglect AML procedures for the sake of short-term profit, even a very significant one. Businesses should focus on long-term prospects. It is possible only in legitimate activities.”

Heron Nelson

Heron is a business blogger with a focus on personal finance and wealth management. With over 7 years of experience writing about financial topics, Heron has established herself as a trusted voice in the personal finance space. She has a deep understanding of financial concepts and strategies, and is able to explain them in a relatable and actionable way for her readers.