When traditional finance adopts crypto: Updating risk assessments and controls
Abstract
As regulatory clarity around digital assets improves and enforcement eases ߞ especially in the USA ߞ traditional financial institutions may find the time right to enter the crypto market. However, To maintain their positions as trusted institutions, the most successful institutions will be updating legacy risk frameworks to capture the distinctive risks and challenges inherent to cryptocurrency products and services. This paper examines how financial institutions can adapt their risk and compliance functions to leverage opportunities in the crypto space while mitigating threats to their overall regulatory obligations and financial crime exposure. Beginning with a brief overview of recent regulatory developments that are encouraging greater institutional participation, the paper then outlines how crypto introduces new and evolving risks that require specialist attention. The paper concludes with practical guidance on embedding crypto into enterprise-wide risk assessments (EWRAs). Institutions that wish to innovate responsibly must ensure these controls are designed to meet regulatory expectations while maintaining trust with clients and stakeholders. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Meredith Fitzpatrick is Forensic Risk Alliance’s (FRA) Global Director of Cryptocurrency, Investigations and Compliance, based in Washington, DC. She joined FRA after seven years as a special agent at the Federal Bureau of Investigation (FBI). She is a subject-matter expert in the investigation of cryptocurrency-enabled money laundering and computer intrusion incidents, including Russian state-sponsored computer intrusions, noncompliant cryptocurrency exchanges, theft of personally identifiable information and intellectual property, ransomware, dark web marketplaces and business e-mail compromise (BEC) schemes. Meredith has extensive experience working on multinational investigations and collaborating with foreign intelligence services and law enforcement agencies to solve complex investigative issues.
Thomas Hyun is a Director specialising in cryptocurrency compliance, also based in Forensic Risk Alliance (FRA), Washington, DC. He brings over 14 years of industry experience as a compliance leader, with a focus on anti-money laundering (AML) compliance in emerging payment technologies across the blockchain and digital asset ecosystem. Prior to joining FRA, Thomas was the Director of AML and Blockchain Strategy at PayPal for four years, where he established PayPal’s financial crime policy and control framework for its cryptocurrency-related products. His earlier roles include the Director of Compliance and Bank Secrecy Act (BSA) Officer of Paxos and the Vice President of Compliance at Mastercard as a dedicated compliance officer for its consumer products portfolio. He also spent over seven years within the forensics practice at Ernst & Young, working on a variety of financial crime compliance (FCC) investigations for US and foreign-based financial institutions.
Sharon Hall is a Director at Forensic Risk Alliance’s (FRA) Global Forensic Accounting Team, based in London. She holds more than 20 years of experience in corporate finance and forensic accounting, providing clients with regulatory risk and compliance services, with a particular focus on anti-bribery and corruption (ABC). Her expertise includes the design and evaluation of compliance programmes and internal control frameworks. This includes developing, implementing and managing compliance systems, policies and procedures, codes of conduct, third party risk, trade sanctions, export controls and corporate governance.
Arianna Radu is a Senior Associate at Forensic Risk Alliance’s (FRA) Forensic Accounting Team in Dubai. She has experience supporting investigations, litigation, due diligence and eDiscovery, with particular focus on fraud, money laundering, bribery and corruption. Arianna offers clients her combined expertise in forensic accounting and forensic technology, having worked in both teams since joining FRA in 2021. Since transitioning to the forensic accounting team in 2023, she has focused on financial investigations and litigation support.
