One Step Closer Towards The Legal Wrapper: OWS the AML Compliance & Due Diligence Playbook

To start 2022 on a positive note, I would like to announce that as of today Open Web Sandbox has its own AML Compliance and Due Diligence Playbook entirely compiled by Legal Guild.
In this overview, I would like to shed light on:

  • The nature of the collaboration OWS had with Legal Guild in 2021
  • Give a summary on the identified risk assessment made specifically for the OWS
  • Elaborate on the brand new AML / Compliance / Due Diligence Playbook
  • Update on the OWS Privacy Policy

1. Context

Back in September, OWS opened up a conversation with Legal Guild regarding the potential need to set up KYC policy since OWS operates community funds to distribute to contributors for tasks undertaken on a monthly basis in support of the NEAR ecosystem. We sought to have a risk management tool that would be used to protect the OWS from various associated risks.

Considering that we work with contributors from all over the globe and the issue of cryptocurrencies being in the legal grey area, we saw this collaboration as the first step to a workable legal disclaimer. In the last couple of months, we have been communicating OWS legal needs and concerns to Legal Guild while @SChamat together with his team were attentively listening, doing the necessary research about the complex matter as such but also inquiring into the specifics of OWS and communicating back to us confirming each time.

Today, we are proud to share the results with the community and we are hoping that all the work done by Legal guild will be taken seriously, spread across the community and applied where possible. The primary goal was to set up a legal policy for OWS but today this documentation is accessible to everyone to benefit from it. Voilà!

2. Identified Risk Assessment (FOR OWS)

Legal Guild used OWS goals and needs to create a use-case scenario that gives high-level recommendations on how to identify and tackle specific risk levels. Concrete considerations were included on the actions to perform that can also be used by other communities or projects with similar issues.
To check the OWS Risk Assessment here.

3. AML / Compliance / Due diligence Playbook (GENERAL for everyone)

This is a more general guide compiled by Legal Guild for the NEAR Community.

This document is not focused on the OWS, but it was created based on OWS concerns. This playbook is a great opener to a legal conversation various Guild/Projects might be having these days.
To check AML Playbook here

4. OWS Privacy Policy (for OWS)

Lastly, Legal guild has prepared the first draft for OWS Privacy Policy and recommendation on how to implement it on the OWS website. The final bits of the draft are being currently finalized and we will add the website plug-in in the coming days.

Acknowledgement

In the context of the new payout processes, the legal wrapper of every entity becomes extremely important. This being said, I would like to express my personal gratitude to @SChamat and the members of his guild who spent a considerable amount of time to share first learnings and discoveries relevant not only to OWS but for all the NEAR entities that pose similar questions.

I would also like to thank @mecsbecs for playing an advisory role on behalf of NF and coordinating this collaboration in the right direction when needed.

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So delighted to see this all come together! May it prove useful to other Guilds and my thanks to @SChamat and Edo for this.

Especially calling attention to this for the @creativesdao-mods + @vandal as this has been a point of conversation over the past couple of months
(pg 13 in the AML Playbook full document PDF outlines the different high risk jurisdictions and jurisdictions with strategic deficiencies).

@marketingdao-council should also give the AML Playbook in particular a look.

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Good evening, @SChamat ! As I know Ukraine doesn’t have any international sanctions. Could you please clarify this question for Ukrainian contributors.
Thank you

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@TRosario @parisinocencio

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Thanks for tagging @tabear ! I had a meeting with @SChamat about this AML and Playbook, I got to kinda review it and in fact was very helpful to understand a few things about the legal status of Crypto related stuff in general.

@parisinocencio was trying to add some notes, to send of over to the Legal Guild, specificly for Portugal, since he’s a bit in on the Visa legal legislation part of it.

I will be passing this wrapper to the people that I know that may need. Thanks Legal Guild!

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Thanks for sharing this post with the community. I believe this can serve as a lighthouse for everyone who is trying to navigate through these tricky waters. Applaud the effort by everyone involved in putting this together!

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We are happy to finally share this content with the community! even though it may work more as guidance, in general terms, for designing and implementing KYC/AML controls in our communities. Both documents showcase best legal recommendations for crypto-backed transactions: one of them focused in defining a risk based approach, while the other one intends to bring us closer to Due Diligence procedures connected to crypto.
Thanks to the OWS team involved in this development.

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Hi! Thanks for your interest in the content and your comments.
To focus on a specific jurisdiction, it is strongly recommendable to contact and specialist in that country; since there is a lack of an applicable worldwide framework, the compliance with national regulations or initiatives will be key.
A good starting point could be checking the FATF reports specifically focused on Ukraine: Documents - Financial Action Task Force (FATF)

Our recommendations have to be understood as recommended good legal practices. The implementation of controls in your organization or activities, should be subject of consultation with an expert in your specific jurisdiction.

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Hi Everyone,

After checking on the Identified risk assessment, our legal guild recommends the possible geographic blocking of contributors that live in the Philippines. Is my understanding correct ? If this is so and OWS finally adopts this measures, will this mean that there is a chance that we Filipinos may be banned from the whole NEAR community all together? I personally felt home the first time I encountered this wonderful community I’m sure all Filipino contributors feel the same way too. it would be really sad if this would become the eventuality. Hope you can shed some light on this. But anyways, I have nothing but praises to the amazing efforts being done by the community to serve the greater community. Keep up the good work guys

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I understand that there is no finality yet on what OWS will ultimately implement from these recommendations. Just want to add that many of here in the Philippines have active Binance accounts. As you may already know to have one, one must pass KYC requirements. Hope this info could become a consideration if in case the time comes when OWS really need to decide if contributors from the Philippines would be supported. Thanks

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Dear @build2gether,

I am glad you have raised this point. As @SChamat indicated above, these are not rules but guidelines and they will be treated accordingly at least for now. While there is indeed a list of countries that expose the OWS Council to certain risks, we will do our best to cross-check and validate whether there is indeed a risk posed by a contributor from a certain country on an ad hoc basis. This means that:

  1. Concerns will be mostly raised once the paid amount exceeds 10k USD (below is considered as low risk) - which does not happen at the moment in OWS and we do not foresee individual contributors getting these rewards for the small tasks/projects we offer
  2. Once the concern is raised, the decision will also depend on whether the person can prove his/her identity with a valid document. Anonymous payouts will be minimized eventually.

I hope that brings some clarity!

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Brilliantly explained. To add to the clarification, those lists, as well as the other tools, are intended to be used to implement “best legal practices” in our communities and projects; never as absolute rules applicable to all projects and cases (always check your specific situation with a legal specialist in your jurisdiction).
This also means that below those amounts where there is an applicable low risk level to specific actions, all the controls that a community or organization may find as adequate, should be understood as a recommended and proactive measure to implement those.
Its always good to prevent things before they happen!

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Thank you very much for these comforting clarification. it’s really a good thing for you and the rest of your dedicated team to work on these matters. early on when everything and everyone is in full steam in making the platform rewarding and viable. We know how things can suddenly go wrong when government regulators start checking for legal compliance. And actually I am currently on the drawing board for a cofundraising and perks giving project for the platform, that I will also be confronted with the same issues later. So these exchanges really becomes valuable educational experience not only to me but I know many of the builders here are learning much as well. Again thank you for your time and will closely monitor this topic for any update the community will have. Mabuhay !

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Very well taken and accepted, due diligence is indeed very important and helpful in the long term for everyone to always do. Glad to have your legal team and the rest of the team guiding all of us through these “unchartered” territory. We know you are all there to help. Kudos to all of you

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Visual is one of our favorite formats to share content and to simplify the complexities of the legal blockchain world. Here are the graphics that we created using #LegalDesign to bring you clearer and more focused information about KYC and Due Diligence closely working with the OWS:

  1. Risk Assessment map OWS

  2. Risk Assessment procedure OWS
  3. AML compliance and Due Diligence in crypto
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