Learning Objectives
By completing this simulation, you will:
- Apply KYC/AML principles to real-world cryptocurrency scenarios
- Evaluate transactions against MiCA, FATF, and US regulatory frameworks
- Identify red flags and suspicious activity patterns in crypto transactions
- Make risk-based compliance decisions with proper regulatory justification
- Understand the tension between crypto innovation and regulatory compliance
Scenario Context
Your Role: Chief Compliance Officer
You are the Chief Compliance Officer at CryptoSecure Exchange, a regulated cryptocurrency exchange operating in the European Union with US customers. Your exchange is licensed under MiCA and registered as an MSB (Money Services Business) with FinCEN in the United States.
Today, you must review five flagged customer cases that require compliance decisions. Each case involves potential regulatory concerns related to KYC/AML, sanctions compliance, or suspicious activity.
Your task: For each scenario, decide whether to approve the transaction, flag it for enhanced review, or reject it outright. You must cite specific regulatory requirements and explain your reasoning.
Materials Provided
- scenarios.html - 10 customer scenario cards (complete 5 required + optional bonus scenarios)
- regulatory_guide.html - Quick reference for MiCA, FATF Travel Rule, US regulations, and red flags
- decision_worksheet.html - Template for documenting your compliance decisions
Activity Timeline
- Make a compliance decision (Approve / Flag / Reject)
- Cite specific regulatory provisions
- List additional information you would request
- Assess the regulatory risk level (Low / Medium / High)
- Your most difficult decision and why
- One scenario where regulations created a gray area
- A recommendation for improving crypto regulation
Evaluation Criteria
| Component | Points | Description |
|---|---|---|
| Regulatory Citations | 15 | Accurate reference to MiCA, FATF, SEC/CFTC rules |
| Decision Quality | 15 | Sound risk-based judgment with clear reasoning |
| Information Requests | 10 | Appropriate additional due diligence identified |
| Risk Assessment | 5 | Realistic evaluation of compliance exposure |
| Presentation | 5 | Clear communication of compliance reasoning |
| Total | 50 |
Bonus scenarios: +5 points each (maximum +15)
- There are often no "perfect" answers in compliance - justify your reasoning
- Consider both the letter of the law and the spirit of AML/KYC protections
- Think about practical implementation challenges
- Your exchange's reputation and regulatory standing are at stake
Submission Requirements
- Completed decision worksheet for all 5 required scenarios
- 10-minute presentation addressing the three reflection questions
- (Optional) Bonus scenario worksheets for extra credit
Submission deadline: End of class period
Related Resources
Assignment Resources
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