Anti-Money Laundering (AML) and Know Your Customer (KYC) PolicyLast Updated: [25/05/2023]1. IntroductionJohn Kruger Crypto Law Firm (hereinafter, “the Firm”) is a California-based law firm that provides legal services primarily related to cryptocurrency, digital assets, and other blockchain-related matters. The Firm is committed to conducting its practice with the highest standards of professional ethics and in compliance with all applicable federal and state laws and regulations, including those related to anti-money laundering (AML) and know-your-customer (KYC) requirements.
This AML/KYC Policy (hereinafter, “the Policy”) outlines the internal procedures and responsibilities designed to prevent the misuse of the Firm’s services for illicit financial activities such as money laundering, terrorist financing, fraud, or other illegal conduct.
2. Regulatory FrameworkFederal Regulations:
- Bank Secrecy Act (BSA) and its amendments, including the USA PATRIOT Act, set out obligations for financial institutions and certain businesses to implement AML measures and report suspicious activities.
- FinCEN (Financial Crimes Enforcement Network) issues guidance and regulations related to virtual currencies and digital assets, as well as suspicious activity reporting (SAR) obligations.
California State Regulations:
- California professionals, including law firms, must adhere to state laws that may impose or reinforce additional requirements for verifying client identities and detecting suspicious transactions.
- The California Rules of Professional Conduct require attorneys to maintain high ethical standards, which include diligence in confirming the lawful purpose of client engagements.
Legal Profession Context:
- As a law firm, the Firm operates under strict confidentiality and attorney-client privilege rules. Nonetheless, when providing services that may involve financial transactions or trust accounts, the Firm is attentive to potential AML/KYC risks.
3. Scope of the PolicyThis Policy applies to:
- All attorneys, partners, associates, paralegals, and support staff employed or contracted by the Firm.
- Any new or existing client relationship in which the Firm may facilitate or advise on transactions involving digital assets (e.g., cryptocurrency trading, token sales, asset transfers, etc.).
- Activities within or originating from California, as well as multi-state or international engagements that may trigger U.S. federal AML requirements.
4. Client Due Diligence (CDD)The Firm adopts a risk-based approach to Client Due Diligence (CDD) by categorizing clients or engagements according to perceived AML risk. Key components of our CDD process include:
Identification and Verification- Collecting essential client data such as legal name, physical address, date of birth (for individuals), and, when appropriate, Tax Identification Number (TIN) or Employer Identification Number (EIN).
- Requesting and reviewing valid government-issued identification (e.g., driver’s license, passport) to confirm identity. For corporate entities, verifying incorporation documents and beneficial ownership.
Risk Assessment- Evaluating whether a client’s geographic location, nature of business, or source of funds indicates elevated risk (e.g., cash-intensive operations, high-risk jurisdictions, digital asset anonymity features).
- Assigning a risk category (low, medium, or high) based on these factors, which determines the level of scrutiny applied to the engagement.
Enhanced Due Diligence (EDD)- For high-risk clients or complex transactions (e.g., cross-border cryptocurrency movements, large DeFi protocols, etc.), the Firm may implement Enhanced Due Diligence. This may include additional documentation requests, reference checks, or ongoing transaction monitoring.
5. Ongoing Monitoring Transaction Review- Although the Firm is not a financial institution per se, it reviews client transactions when they are part of the legal services provided (e.g., escrow services, settlement payments, trust account deposits).
- The Firm flags and investigates any unusual or suspicious activity, including discrepancies in payment instructions, large or unanticipated transfers, or digital asset transactions that do not match the stated scope of legal services.
Periodic Updates- For ongoing or long-term client relationships, the Firm may periodically update the client’s CDD file to capture changes in ownership structure, lines of business, or financial profile.
Recordkeeping- The Firm maintains appropriate records of identification documents, correspondence, and transaction details for at least five (5) years, in accordance with federal and California rules.
- All records are stored securely to protect confidentiality, consistent with attorney-client privilege obligations and data protection laws.
6. Suspicious Activity Reporting (SAR)Policy on Suspicious Activities- While U.S. law firms are generally not classified as “financial institutions” subject to the same SAR obligations as banks, the Firm takes reasonable measures to detect and prevent the use of its services in money laundering or terrorist financing.
- If the Firm becomes aware of credible evidence indicating a client’s involvement in illegal activity, attorneys will evaluate whether ethical or legal requirements mandate withdrawal from representation and/or reporting to appropriate authorities (while considering confidentiality and privilege rules).
Consultation and Disclosure- The Firm’s partners consult with experienced counsel regarding ethical obligations, including California’s Rules of Professional Conduct, before any disclosure that might conflict with attorney-client privilege.
- If required by law, the Firm cooperates with authorized governmental inquiries while maintaining its ethical duties to clients.
7. Training and AwarenessEmployee Training- All attorneys and staff are trained to identify red flags and unusual patterns that may suggest money laundering, terrorist financing, or other illicit conduct.
- Staff receive periodic updates on federal regulations, FinCEN advisories, and California-specific guidance related to digital assets.
Ongoing Education- The Firm’s personnel stay informed about evolving regulatory frameworks around cryptocurrency and blockchain, including updates from the California Department of Financial Protection and Innovation (DFPI), FinCEN, and other relevant authorities.
8. Internal Controls and Compliance OfficerCompliance Oversight- The Firm designates a Compliance Officer, a partner or senior attorney, responsible for implementing and maintaining the AML/KYC Policy.
- This individual ensures that the Firm’s processes adhere to relevant state and federal regulations.
Independent Reviews- From time to time, the Firm may engage external consultants or auditors to perform independent assessments of the Firm’s AML/KYC controls, recommending enhancements or corrective measures as necessary.
9. Disciplinary ConsequencesNon-compliance with this Policy may expose the Firm and individuals to regulatory and legal risks. Any attorney or staff member who willfully disregards these procedures may face internal disciplinary action, up to and including termination, in addition to potential external penalties.
10. Revisions and AmendmentsJohn Kruger Crypto Law Firm reviews and updates this AML/KYC Policy periodically to reflect changes in law, technology, and best practices. Any revised version will be posted on the Firm’s internal and external communication channels, with updates clearly indicated.
11. Contact InformationFor questions regarding this AML/KYC Policy, or to report any suspicious activity, please contact:
John Kruger Crypto Law Firm1150 Olive Street, Los Angeles, CA
office@johnkruger.pro
