Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What are the three lines of defense for managing AML risk for virtual asset service providers?

1. Customer unit

2. Compliance unit

3. Internal audit

4. Board of directors

The correct answer is: Compliance unit

In the context of managing Anti-Money Laundering (AML) risk for virtual asset service providers, the Compliance unit serves as a critical component of the three lines of defense model. This model is designed to enhance an organization’s risk management framework and ensure that adequate measures are in place to control and mitigate AML risks. The Compliance unit is primarily responsible for establishing and enforcing internal policies and procedures related to AML compliance. This includes monitoring transactions for suspicious activities, conducting customer due diligence, and ensuring that the organization adheres to relevant regulations and laws. Their role is fundamental in implementing the mechanisms needed to detect, investigate, and report potentially illicit activities, thus safeguarding the organization from regulatory penalties and reputational damage. The concept of three lines of defense includes the operational management (which is responsible for managing risks), the Compliance unit (which oversees risk management processes and measures), and internal audit functions (which provide independent assurance that risk management processes are effective). Each unit plays its part in maintaining a robust AML framework, but the Compliance unit is specifically focused on the regulatory landscape and direct compliance practices that address AML risks. The roles of other options, such as the Customer unit and the Board of directors, while important in the overall governance and operation of a virtual asset