September 17, 2021
How the first federally-chartered digital asset bank serves both regulators and clients with best-in-class compliance
Anchorage Digital Bank is the first federally-chartered digital asset bank in the United States, making it a key partner for a growing number of institutions seeking to engage securely with digital assets — from venture funds who want to hold assets to banks looking to develop a comprehensive digital asset offering.
"The goal is to perpetuate digital assets by providing institutional infrastructure," says Nathan McCauley, Anchorage Digital’s co-founder and CEO. For Anchorage, that meant creating one cohesive service based on two foundational customer requirements: secure custody of digital assets, which requires extreme technical sophistication, and deep regulatory compliance — to the point of being a regulated institution themselves.
With compliance at the core not only of Anchorage's regulator relationships but also its client relationships, decisions about how to construct and maintain an effective compliance program — and which technologies will power it — take on a whole new level of significance for McCauley and the growing team of compliance experts on-staff at the bank.
A key piece of the puzzle: enterprise-grade transaction monitoring from TRM
As part of the program, Anchorage uses TRM's risk management platform to monitor all incoming and outgoing transaction flows on its platform for indicators of risk. For individual transactions, the platform enables them to detect and review any risk associated with a deposit's source of funds or the destination address of a withdrawal. More broadly, the team relies on analytics from TRM to deliver a big-picture understanding of the flow of funds on the Anchorage platform.
The transaction monitoring process is key for maintaining AML and sanctions compliance, says McCauley, and especially for fulfilling obligations related to the Bank Secrecy Act (BSA) and Office of Foreign Asset Control (OFAC) sanctions programs, which have more specialized screening and reporting requirements.
"Before we launch a new asset, we need to have it covered in our transaction monitoring program. The breadth of TRM's current asset support — and the speed with which they can implement new assets — is extremely important for us."
Another capability that McCauley cites as critical to the program's effectiveness is based on the principle that alerts triggered in transaction monitoring aren't just treated as isolated data points by compliance analysts. "Alerts aren't just alerts; they have a lifecycle that often involves multiple steps and decision points," he says. "Having a case management system built into the tool is key for being able to show what actions we took and how we thought about a particular case."
A matter of trust and security
Founded in 2017 to meet the need for easy, secure institutional custody, Anchorage has since grown into a full-service financial platform and infrastructure provider that opens the door for any financial institution to provide access to digital assets to clients.
Now, as a regulated institution focused on providing an environment its clients and regulators can trust, Anchorage continues to lead the way in practicing best-in-class regulatory compliance and proactive risk management powered by TRM’s blockchain intelligence platform.
Anchorage Digital is a regulated platform that provides institutions simple and secure participation in digital assets, all integrated with custody. As the first federally chartered crypto bank, Anchorage offers the most advanced digital asset platform for institutional investors and setting a new standard for security and usability. With secure custody at its core, Anchorage delivers financial solutions for today and tomorrow. Learn more at anchorage.com and @Anchorage.
About TRM Labs
TRM Labs provides blockchain intelligence to organizations who need to monitor, detect and investigate crypto-related fraud and financial crime. Trusted by financial institutions, crypto businesses and government agencies across the globe, TRM's platform includes tools for crypto wallet screening, transaction monitoring, VASP due diligence and investigative tracing, and offers unparalleled breadth in digital asset coverage. The platform enables a growing community of innovators to safely embrace cryptocurrency-related transactions, products and partnerships. trmlabs.com
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