Managing Risks for Virtual Asset Service Providers


Fortify Digital Transaction Security Without Increasing Customer Friction

Physical and Digital Identities verification for virtual asset service providers

As Virtual Asset Service Providers (VASPs) become more firmly established in the financial markets, they will need to establish appropriate controls to manage risk and ensure compliance with regulations. Among the measures they should take according to Financial Action Task Force are:

  • Initial digital identity—VASPs need to be looking at digital identities, such as devices (computers, photos, tablets), logins, locations etc as a first step to access the risk profile of an individual or entity prior to customer onboarding. 
  • Know Your Customer ( KYC) applies even when dealing with a digital identity. VASPs should conduct ID/passport authentication and leverage technology to improve identification efficiency.

  • Physical identity screening—Once an individual or entity has been authenticated, screening should be done for risk related to sanctions, enforcements, adverse media or PEP/SOE status.

  • Ongoing monitoring—VASPs must monitor customers for ongoing risk, given that an individual or entity’s risk status may change. The VASP should recognize a change in behavior and device usage as red flags.

Interested in learning more about how VASPs can mitigate risks and ensure compliance? Check out our second e-book on “What Virtual Asset Service Providers Need to Know About Mitigating Risks from Virtual Assets.”

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