Facebook-backed Diem partners with K2 Integrity to tackle financial crime

Rick Steves

“Diem’s financial crime compliance framework, which is focused on protecting the integrity of the DPN and the financial system, is setting a high bar for the virtual asset industry”

Diem Networks US has partnered with K2 Integrity to strengthen the blockchain-powered payment system with a Financial Intelligence Function (FIF).

The FIF is designed to protect the Diem Payment Network (DPN) from illicit financial activity and works in close collaboration with DPN participants who also are required to maintain strong financial crime compliance controls.

The Diem FIF will provide leadership in detecting and preventing financial crime on the DPN, working with both DPN participants and government authorities to deter misuse of the platform for illicit purposes.

Diem is the blockchain protocol proposed by the American social media company Facebook. While it has found widespread resistance from regulators ever since it was launched as Libra Association, the network kept at it and has been making several moves ahead of an upcoming launch.

In May, and following the unsuccessful efforts to obtain a payments license from Swiss regulator Finma, the project has shifted its focus to the United States and partnered with Silvergate Bank as the exclusive issuer of its to-be-announced stablecoin.

Diem Networks US has built a blockchain-based payment system designed to make payments cheaper and faster while protecting consumers and the integrity of the financial system.

Diem’s FIF raises the bar for financial crime risk management, marrying K2 Integrity’s world-class talent with Diem’s steadfast dedication to preventing financial crime.

Stuart Levey, Chief Executive Officer of Diem Networks US, said: “Designing a framework that sets high financial crime compliance standards has been one of the Diem project’s top priorities, and this is an area where we are continuing to innovate. We are excited by this opportunity to partner with K2 Integrity, a team that has a wealth of experience in this space and is respected internationally for their leadership on anti-money laundering and counter-terrorist financing (AML/CFT) issues.”

“We are proud to be partnering with Diem Networks US to continue developing innovative FIF solutions and supporting Diem’s financial crime risk management program. Diem’s financial crime compliance framework, which is focused on protecting the integrity of the DPN and the financial system, is setting a high bar for the virtual asset industry”, said Juan Zarate, K2 Integrity Co-Managing Partner who was the first-ever Assistant Secretary of the U.S. Treasury for terrorist financing and financial crimes.

“In close collaboration, we are bringing our world-class talent and experts in the field of financial intelligence, virtual assets, and compliance risk management to support Diem Networks US’s efforts to launch and expand its platform with a leading financial crime compliance framework”, Mr. Zarate added.

FIF will be headed by Mariano Federici, Managing Director at K2 Integrity, reporting to Sterling Daines, Chief Compliance Officer of Diem Networks US.

Mr. Federici is the former Chair of the Egmont Group, the international body of Financial Intelligence Units (FIUs) and is Head of Argentina’s FIU. He has played a pivotal role in the development of the international AML/CFT framework. Mr. Federici will work alongside Diem and K2 Integrity’s compliance teams.


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