Tread carefully in the crypto world, cautions financial crimes expert Anurag Jain
Anurag Jain, a Financial Crime Compliance (FCC) expert and Co-founder of Entity Vector, has two decades of techno-functional experience, providing advisory and technology-led solution services to banks globally.
Friday June 03, 2022,
4 min Read
For over 18 years, Anurag Jain has worked with Infosys, KPMG, TCS, Oracle, Metric Steam, and many other big names in the tech world as a Financial Crime Compliance (FCC) expert.
Today, he is building Entity Vector—a financial advisory firm to help fintech startups and companies comply with the regulatory requirements of the FCC.
In a conversation with The Decrypting Story, Anurag shares his thoughts on the ever-expanding and ever-evolving worlds of centralised and decentralised finance.
Edited excerpts from the interview:
Decrypting Story [DS]: What is the scope of financial crimes in the crypto world, especially when the sector is yet to be fully explored?
Anurag Jain [AJ]: The crypto market is still in its infancy, although its market cap has seen a 10X jump over the last two years.
Between 2020-22, cryptocurrency’s market cap went from half-a-trillion dollars to about $2 trillion, demonstrating widespread market adoption of cryptocurrencies that generate tremendous value for consumers and the economy.
However, for consumers, investors, and business partners, many financial crime risks are associated with it—ranging from money laundering to data theft to ransomware attacks.
The financial crime compliance market within the crypto world is very nascent, where regulations and market structures are yet to be developed and defined properly.
As the market matures, so will the Modus Operandi of perpetrators to launder money quickly, anonymously, and across borders, thereby increasing the demand for financial crime compliance experts to safeguard crypto stakeholders from suspicious activities.
Financial crime compliance services can be categorised into four key domains: cybersecurity, anti-money laundering, fraud risk management, and data privacy and protection.
DS: How should people react to the ever-expanding world of DeFi and fintech? Should we be apprehensive about it or embrace it?
AG: I would be slightly biased in my opinion since I am a practitioner in the risk and compliance industry. I would urge consumers to err on the precautionary side and look for regulatory or government guidance.
Our regulators are at the forefront of this development, and they are taking the necessary steps to protect the consumers in every possible way.
However, this is still a development in progress, so one must practice caution during the early development stage.
DS: What should crypto stakeholders like exchanges and developers do to ensure the safety and security of users in the crypto world?
AG: Most crypto entrepreneurs come from a technology background with limited experience in developing and delivering a regulated financial service or product.
The first line of defence against financial crimes is leveraging expert opinion to tread carefully into the world of decentralised finance (DeFi).
The next step is to combat financial crime by taking ownership. Stakeholders must take ownership to set the tone and make financial crime compliance the responsibility of every employee in the company.
Finally, they must perform an independent assessment of their financial crime compliance programme periodically to ensure they are aware of the hidden risks and blind spots of their operating environment.
DS: Tell us about your startup EntityVector. What are its plans?
AJ: EntityVector was born to help emerging fintech startups comply with regulatory mandates and mitigate reputational risks. The boutique advisory firm provides customised financial crime compliance solutions to fintechs, crypto firms, DeFi platforms, and NFT markets.
The startup has adopted a data-driven approach, complementing existing legacy systems and processes to provide advisory services, analytics solutions, and transformation programmes.
EntityVector is led by a team of expert Chartered Accountants, CAMS, CISA, PMP, and others. The team has a collective experience of working with Big 4 banks and global technology and data service providers based in the US, India, and other global markets.
In the short term, we aim to build deep capabilities for executing mission-critical projects for our clients with high-tech suppliers in the financial crime compliance field and invest in training the consultants.
Further, while EntityVector has started operations by focusing on a niche area of FCC, targeting mid-tier banks and fintech companies, in the long-term, it intends to develop broader capabilities across risk management and regulatory compliance.
Moving forward, it will develop deeper technology capabilities through acquisitions if required. EntityVector will prioritise accelerating machine learning (ML) capabilities to help its clients operate efficiently and cost-effectively.