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In this captivating episode, we dive deep into the intricate world of crypto compliance and investigations. Our special guest, Lourdes C. Miranda, CAMS, CCFI, CEIC, CFE, CRC, CTCE, FIS, PI, Chief Compliance Officer, and Chief Consultant at Fintech Advisory Group, shares her extensive experience in the crypto realm, dating back to 2017.
๐ Key Highlights of the Episode:
- Evolving Landscape of Cryptocurrency: Discover the significance of staying informed and compliant in the ever-changing global cryptocurrency landscape.
- Insider Knowledge & Tech Tools: Lourdes discusses the essential tech tools and her role in ensuring compliance across multiple platforms.
- Global Jurisdiction & Challenges: Understand the complexities of global jurisdiction and the critical need for continuous certification and education in the crypto world.
- Preventing Illicit Activities: Learn Lourdes's unique approach to thinking like bad actors, aiding in the prevention of illicit activities.
- Collaboration and Regulation: Explore her collaborative methods to stay updated with industry developments and new regulations, ensuring thorough compliance and due diligence.
"Understanding Compliance in Fintech: As a chief compliance officer, I always remind our clients that we're not the enemy. Compliance is there to protect your company from bad actors, protect your company's reputation, preventing your company, from becoming the first page of The New York Times, the front pages of The Washington Post, and prevent them from being the next, FTX, Bitzlato or ChipMixer." - Lourdes Miranda
๐ก This episode is a treasure trove of unique insights and valuable lessons for anyone interested in or currently navigating the crypto space. Whether you're a seasoned expert or just starting out, there's something in this discussion for everyone!
๐ Tune in now and join us in expanding your understanding of compliance, investigations, and collaboration in the fast-paced world of cryptocurrency. Don't miss out on this opportunity to learn from one of the pioneers in the field!
#CryptoCFOs #CryptoCompliance #Web3 #DigitalAssets #Cryptocurrency #Podcast #FinancePodcast
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What is From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets?
"From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" is your source for expert insights on the rapidly evolving world of crypto and digital assets. Hosted by Taylor Zork, CPA, and presented by CryptoCFOs, this interview-based podcast delves into the complexities of tax and accounting for Web3 and digital assets. Tune in as Taylor sits down with top finance professionals, and CEOs of Web3 organizations to explore the latest developments and best practices in this exciting field. Whether you're a seasoned finance professional or simply curious about the future of digital assets, this podcast will keep you informed and engaged. Subscribe now to stay ahead of the curve and unlock the potential of Web3 and digital assets in tax and accounting!
Taylor Zork, CPA [00:00:09]:
Hello and welcome to the Niche to Necessity podcast. My name is Taylor Zork, and today we have on our program Lourdes Miranda. Lourdes is a chief compliance officer and a chief consultant with Fintech Advisory Group. Welcome, Lourdes.
Lourdes Miranda [00:00:24]:
Hi, Taylor. Thank you. Thank you very much. And your team, crypto CFOs, for having me here today. I'm really excited to speak with you.
Taylor Zork, CPA [00:00:32]:
Yeah, yeah. We've had you on many of our Watercolor Wednesdays, so it's good to have a formal interview with you because I love what you're doing for the compliance space in crypto. So yeah, yeah. Thanks again for coming on.
Lourdes Miranda [00:00:45]:
Thanks, Taylor.
Taylor Zork, CPA [00:00:47]:
So just a quick introduction and kind of like, background for people who don't know you already. Could you walk us through your journey from the intelligence community and federal law enforcement to becoming a chief compliance officer and a chief consultant at Fintech Advisory Group, especially in the context of the evolving crypto landscape?
Lourdes Miranda [00:01:09]:
Absolutely, Taylor. I was first introduced to Crypto in 2017. While I was in the intelligence community, the Cyber team reached out to me because I had a background follow the money background, financial crimes investigations background, my almost 30 years of experience in financial crimes investigations and intelligence collection analysis. It's like, let's talk to Lord if she can help us work on this mission. So I said, yeah, no problem. So when I walked into their lab, it's like, Yo, yeah, by the way, this is not traditional money laundering or terrorist finance. This is on crypto. I'm like, great.
Lourdes Miranda [00:01:50]:
I've heard about crypto, and when I looked at their monitors, I was like, what is this? It was like, WTF. And I wasn't even thinking wednesday, Thursday and Friday. It was like Elf language to me. And I was like, I'm not sure I'm the right person for you. And they're like, no, you're the perfect person for us because you don't know crypto, but you know the traditional methods of moving money and identifying illicit finance. So that's why they brought me in. So for one year, I worked on this mission with the Cyber unit at this intelligence community agency, and the rest is history. So when they were describing to me what the mission was, because that's what we do, what is the goal of the mission, what is the mission, and what the end results you want to look for in this mission? So when they were talking to me, I said to them, please speak to me in layman terms.
Lourdes Miranda [00:02:41]:
I do not understand crypto terminology. Just talk to me in English and then we can go from there. So when they finally briefed me, I'm like, okay, I got this. So what I did, I created a check that a lot of people in the audience who've ever seen my webinars or attended conferences where I spoke, I always shared this graphic check. And I always say to the audience or speakers or listeners, if you ever written a check, you could understand a crypto transaction. So I took this Elf language in the crypto sphere and put it into layman terms because I do not have an engineering or cybersecurity background. So that's what I did. So then they trained me how to analyze the blockchain.
Lourdes Miranda [00:03:21]:
So I took what I learned from the cyber team with the blockchain was how to analyze the blockchain. I thought of a bank statement from a bank. I'm sure those in the audience will remember what a bank statement looked like back in the day when you used to receive your information from your bank. So that's what I did from 2017 2018, the cyber team introduced me to the crypto ecosystem, and the rest is history. So how I got into compliance so I left the intelligence community. I'm like, this is the future. So when I left the intelligence community to join the private sector, I connected with one of my contacts. I knew her from the Treasury Department.
Lourdes Miranda [00:04:04]:
She knew me when I was at CIA. And I reached out to her for some consulting opportunities and goes, you're the perfect person, Lourdes, to join our compliance team. And I'm like, Wait a minute. I don't have a compliance background. I just left the intelligence community. I have a law enforcement background as well. She goes, no, we need somebody like you to teach her compliance and investigators how to think like field agents, how to think like bad, you know? You know, KYC is know your customer well. When she had me join her team, I taught them the other KYC, know your Criminal to understand how bad actors work.
Lourdes Miranda [00:04:43]:
And I shared my experiences out in the field, how we worked on building cases and how we collected intelligence and analyzed the intelligence we gathered against bad actors. So that's how I joined the compliance world. So I took my intelligence and law enforcement background and applied it to the compliance world, and the rest is history.
Taylor Zork, CPA [00:05:07]:
That's great.
Lourdes Miranda [00:05:08]:
Yeah.
Taylor Zork, CPA [00:05:08]:
I mean, it sounds like a really good crossover, right? Because you understood fundamentally, like, you say, the bad actors, how they thought, what their modes of operating were, and then so it gave you an advantage in the compliance space to know what to look for and to kind of dial in on those investigations. That's very cool.
Lourdes Miranda [00:05:32]:
Correct. Because, as you know, compliance is being proactive and investigations is being reactive. So I was teaching compliance officers, who are the first line of defense, to think like a bad actor before something happens to prevent it from happening, before it becomes an investigation. Right.
Taylor Zork, CPA [00:05:49]:
It's like what we do in accounting when we put together really good, thorough books. We're being proactive so that in the event that you get audited, you are ready to go and you have everything detailed and easy to look back onto a little bit different, because you're looking at people who are trying to commit crimes and trying to prevent that. But yeah, similar philosophy. I love it.
Lourdes Miranda [00:06:13]:
Thank you.
Taylor Zork, CPA [00:06:14]:
So as far as the Web Three and cryptocurrency evolution, how have you seen the perception of cryptocurrency and Web Three technologies change over the past decade, especially from a regulatory, compliance and investigative perspective? I know you've been in the industry more since 2017, but just in general, where have you seen that move?
Lourdes Miranda [00:06:40]:
Wow, Taylor, I could be here all day talking to you about that. But from what I've seen so far, users have more control and more privacy, which from a regulatory and compliance and investigative perspective can be challenging to monitor transactions to investigate and disrupt nefarious activity because there's so much privacy and control in the crypto ecosystem and Web Three and other platforms in the crypto ecosystem. So it's a big challenge. So from a regulatory perspective, again, this can be very tricky when it comes to the crypto with crypto because complying with regulations, everybody knows crypto is global. So from a regulatory perspective, complying with regulations can depend on the country the startup is registered in, what licenses that entity has, and which countries they're offering products and services. I zork with a lot of clients and my first question is where are you registered and which jurisdictions, which countries you want to offer products and services? Because if they want to register the money service business in the United States, they got to register with US. FinCEN us is one of the United States'regulatory components is know, and that can go on and on and on because then some clients want to offer securities or commodities. Then you got to deal with the United States securities and Exchange Commission.
Lourdes Miranda [00:08:10]:
And then you have Europe, you have Mica requirements, then you have the United Kingdom. They have their own different regulatory requirements. So that's a regulatory challenge in itself. When it comes to crypto from a compliance perspective, some startups only require users to open a wallet with just a name or an email or a phone number, which drives me crazy, just blows my mind. And they're okay with that because in their minds as a startup, they want to generate money, they want to make money. I get that. And sometimes they forget about compliance. So I'm there to remind them that it's not enough to have a user, from a compliance perspective, open up a wallet with just a name, an email and a phone number.
Lourdes Miranda [00:08:59]:
I talked with a lot of my clients about that. So from an investigative perspective, this is the most challenging. Who has jurisdiction when the crime has been committed? Because as you know, crypto is so global. We can have a bad actor in Europe engaging in transactions from Europe to the United States, from the United States to Africa. And the question is, where did the crime start? Who committed the crime and where are they located? So jurisdiction is a big issue with investigators. It's the number one challenge that we have. I worked with a lot of DEA agents and IRS agents and FBI agents, and, you know, my question is, who has jurisdiction? We know when they bring me on as consultant, and it depends. Right.
Lourdes Miranda [00:09:52]:
That's my favorite answer. But one DEA agent mentioned to me that she went on the dark web, made a purchase. Long story short, the DEA grabbed jurisdiction. So that is the number one problem with the crypto ecosystem. And who has jurisdiction because it spans.
Taylor Zork, CPA [00:10:12]:
So many different things, right? It could, yeah. Like you say, it's muddy. Right. And I think that's both the thing that we enjoy about the industry, but also the thing that poses unique challenges.
Lourdes Miranda [00:10:27]:
Absolutely.
Taylor Zork, CPA [00:10:28]:
Speaking of challenges, you touched on some, but what are kind of the most significant challenges you've faced when working with fintechs and blockchain entities in terms of compliance and investigations? So how do you see the role of traditional finance institutions, financial institutions evolving with the rise of DeFi and other web three technologies?
Lourdes Miranda [00:10:52]:
Great question, Taylor. Thank you. In terms of compliance, fintech, and blockchain entities, as a chief compliance officer, I always remind our clients that we're not the enemy. Compliance is there to protect your company from bad actors, protect your company's reputation, preventing your company, um, becoming on the first page of The New York Times, the front pages of The Washington Post, and prevent them from being the next, you know, bitslato and chip. You know, in terms of compliance for startups, fintechs, whatever people want to call them, it's challenging because they see not all, but a lot of these startups are young people who are new in this field, young CEOs. They don't understand the value of compliance. So as a chief compliance officer, I'm there to explain to them and reassure them that compliance is there for a reason. And I literally go down the list.
Lourdes Miranda [00:11:58]:
I can be here all day going down the list with them. So, yeah, I constantly remind them because they see compliance as a hindrance. And I'm like, no, you need compliance because we're here to protect you. So that's a challenge. From traditional to the crypto ecosystem in terms of investigations, okay? Conducting any type of investigation takes time. And I've learned, working with startups and blockchain entities, that investigators have to work fast and cautiously before the user realizes that their wallet has been frozen, because when we suspect nefarious activity, when we're conducting transaction monitoring or Pep and sanction screening, and we're like, okay, we have a problem, we have to work fast. In the crypto ecosystem when it comes to investigations, traditional investigations, in law enforcement and private sector, it takes longer. But in crypto world, we got to work fast because we can't let the user know that we froze their account, we froze their wallet.
Lourdes Miranda [00:13:14]:
We have to be cautious without compromising the investigation because there's a lot of entities involved in the crypto ecosystem. And again, we have to make sure to conduct the investigation fast and cautiously without alerting the user that their account is under investigation. Because like I mentioned, sometimes we have to freeze the account until the investigation is closed. And then sometimes, depending on the various activity, we have to keep the account open to continually monitor the money flow and the movement as we collect evidence to build our case. And then you got law enforcement involved. As a startup and as a senior criminal investigator like myself, I'm responsible to determine whether I need to call law enforcement. Do we need to get law enforcement involved or can we just settle it within our own walls, our own company? And then another thing I have to consider as a chief compliance officer when I'm working with investigators do we need to draft a SAR Suspicious Activity Report? Now, if the investigation is in Europe, do we have to draft a suspicious Transaction report? Investigations are very tricky in the crypto ecosystem because you have so many layers, so many people involved, so many different countries, and you have to be careful because we don't want this case compromised. And we have to move fast because the user could either determine why is my account frozen? And we have to determine like in the US.
Lourdes Miranda [00:14:53]:
We're required to report suspicious activity involving money laundering, terrorist financing to the Treasury Department. We have to submit a Suspicious Activity Report within 30 days and in some countries it's one week. So investigations can get tricky. Last but not least, collaboration between teams who gets involved without compromising the case because there's a lot of loose lips that think ships. You've heard that expression about maintaining classified information. So in the crypto ecosystem, that's tough to keep it contained and compartmentalized.
Taylor Zork, CPA [00:15:33]:
Yeah, right. When you talk about freezing accounts, you're talking more in the context of a centralized exchange account type of thing where someone has activity, a wallet on exchange. Is that kind of what you're focusing on?
Lourdes Miranda [00:15:51]:
Correct? Yeah. When we conduct transaction monitoring or Pep and Sanction screening or another entity, another crypto change, or even law enforcement contacts us and submits a report request for information from law enforcement, there's so many layers and it's very difficult to keep it confidential. Yeah, there's so many components and we have to move fast because if my client suspects one of their users on their platform engaging in suspicious activity and we know they're moving money on chain off to another crypto exchange or a different wallet, we may need to contact that entity as well and get them involved. And sometimes you don't want too, because sometimes bad actors use suspicious platforms to move money. Like independent wallet services hold wallets. So crypto investigations to me is one of the most challenging investigations I've ever conducted in my career because it's so global and is so fast. Yes.
Taylor Zork, CPA [00:17:09]:
Yeah, you're right. And everything moves fast. And if you alert the person. So it sounds like the biggest challenges are kind of the cohesion between teams who takes point and then the need to act quickly and swiftly without alerting those individuals of what's going.
Lourdes Miranda [00:17:28]:
And, you know, as an investigator within the entity, you got to work with the compliance team. You have to work with legal, you have to work with the other investigators. And if the transaction is moving from the US. To the UK or Europe, then you got to reach out to the money laundering Reporting Officer in that country. You got to keep the chief compliance Officer like myself informed. It is scary to build a credible, solid, strong case when so many people are involved who are not know. When I was in federal law enforcement in the United States government, it was easy for us to contain the investigation within ourselves. We were already vetted.
Lourdes Miranda [00:18:13]:
We had top secret clearances. We trusted each other with the crypto ecosystem. We have to take chances and reach out to the money Laundering Reporting Officer, who, by the way, I never met in person. But I have to trust to keep this investigation close, hold until it's resolved. Yeah, it's a challenge.
Taylor Zork, CPA [00:18:34]:
Yeah, I can imagine. Okay, speaking of Nefarious activities, and we've talked a little bit so far about anti money laundering AML. You know, given your expertise and your background in AML, how do you think AML practices need to adapt to the unique challenges posed by cryptocurrencies?
Lourdes Miranda [00:18:57]:
How to adapt? Train I'm a firm believer that every entity, any entity that involves any type of money transaction, any money flows, need to learn and understand how crypto moves, need to understand blockchain analytics. Everybody needs to be trained from customer support to the compliance officer to the investigator, to legal, developers, engineers. I'm a firm believer that is Train. Train I'm big on collaboration in the crypto ecosystem. When I consult for startups who are based outside the US. I always make sure their country managers placed in every region, every country that this entity is offering their products and services. And I have that country manager who's from there knows the culture, knows the language, report to me on what's going on. I'm all for keeping everybody in the loop.
Lourdes Miranda [00:20:01]:
Train knowledge, knowledge, knowledge.
Taylor Zork, CPA [00:20:05]:
I think that's a good way to adapt, for sure. Could you share an instance where your AML expertise directly impacted a crypto related investigation or a compliance challenge?
Lourdes Miranda [00:20:21]:
Compliance challenge? Yes. Global regulations. Like I mentioned before, crypto is global. You have to keep up to date with global regulations. Like I'm based in the United States. I'm a chief compliance officer for crypto startups blockchain entities, and I'm a firm believer. When I build a compliance and investigation program for my client, I make sure country managers are placed in certain countries and regions where this entity offers products and services so they can keep me in the loop of what's going on in that country's. Regulations, rules and laws.
Lourdes Miranda [00:21:00]:
I'm a firm believer of that. Keeping up to date with global regulations is exhausting and challenging. So I'm a firm believer to keep. And it's 24/7. There are times I wake up at 03:00 in the morning, eastern Standard Time, US, to make sure I'm going to call in Greece or Nigeria. They're six, 7 hours ahead of me. That's a challenge in itself, because it's 24/7. Yeah.
Lourdes Miranda [00:21:30]:
And then, by the way, me being in the US, we have multiple regulations that we have to continue following, whether it's Know with the SEC, securities and Exchange Commission, with Know licenses in New York, then we got to keep up with Mica in Europe. The United Kingdom has different regulations. It's exhausting.
Taylor Zork, CPA [00:21:54]:
I can only imagine just keeping up with the US alone and then going global is really a challenge. I can only imagine. I focus on US tax based stuff, but I'm also working with clients that know they're multi jurisdictional, so they may know a base in El Salvador, UAE, in Dubai. They have know, they know Switzerland, all these different countries. So it's a challenge keeping up with one, and then when you're faced with multiple, it's a whole other beast.
Lourdes Miranda [00:22:29]:
It is. I have a great example. I had a client who lives in Cyprus who still lives there, and he married a Russian national, and she wanted to open a wallet. And I'm like, she can open a wallet. It's fine as long as we conduct due diligence on her, blah, blah, blah. But she can't have her family in Russia open wallets because you register as a US money service business, even though you're offering products and services throughout Europe. That's great. She's from Russia.
Lourdes Miranda [00:23:03]:
Nothing against Russia, but according to US laws and sanction laws and regulations, she cannot transact in Russia. So he thought I was discriminating against. Like, no, no, it doesn't matter where she's from. What matters is where you live. That's great. She's Russian. I love it. But now she lives in Cyprus and she's married to you.
Lourdes Miranda [00:23:23]:
That's fine. She can open a wallet. She can open two wallets. I don't care. But she can't send money to her family in Russia on your platform. She has to find another method. So I always remind entities, global entities, globally, it doesn't matter where you're from. What matters is where you live and where you open that account.
Lourdes Miranda [00:23:46]:
So this CEO's wife was a great example. Yeah, that's great. She's Russian, but she lives in Cyprus. She's married to you. She's good to go, but we're still going to do due diligence on her. I'm going to do due diligence on you. It doesn't matter where you're from is where you live and where you're going to engage in transactions, the countries. So I keep an Excel spreadsheet on all the countries that our clients have products and services in.
Lourdes Miranda [00:24:12]:
Provides products and services. Yeah.
Taylor Zork, CPA [00:24:15]:
I'm sure that's a beast of an Excel spreadsheet. This kind of question kind of maybe dovetails with the different ways that people in your profession can continue to adapt to crypto and Web Three, but I know that you hold certifications with Chain Analysis and McAfee. How crucial are tools like these in modern financial crime investigations, especially in the crypto space?
Lourdes Miranda [00:24:44]:
Extremely crucial. And I forgot to answer one of your questions, and I'll answer it by answering this question. You need these tools for one reason. I was working at an AML case, and I realized that bad actors are exploiting social media to commit fraud. So I'm like, Wait a minute. And I realized that my clients, customer service representatives, knew nothing about crypto, knew nothing about blockchain, didn't know anything about Bitcoin addresses, and were being exploited by these users, calling the customer service rep, saying, hi, I want a refund. I made a mistake. I did $1,000 transaction worth of Bitcoin.
Lourdes Miranda [00:25:27]:
I made a mistake. Did you refund me? And some customer service reps complied because they didn't understand what the user was asking for. They just wanted to ensure that the users was happy. That's what customer support does, make sure everybody's happy, customers are happy. So he refunded this user $1,000 worth of Bitcoin in their fiat currency, where they were living in their local currency, fiat currency, not realizing that the user was a bad actor, exploited the platform, exploited the customer service rep because the user sent $10 worth of another crypto. Market value was only $10, but told the customer service rep it was $1,000. And then when a bad actor finds a customer service rep who understands crypto and blockchain analytics, and the bad actor realizes that they can't exploit this customer service rep, they'll go on social media like Twitter and Telegram and start vilifying the company live on Twitter, live on Telegram, saying, this company is a fraud. Customer service is not helpful.
Lourdes Miranda [00:26:41]:
I give them zero stars and so forth. So what I've learned when you ask me about tools, tools are crucial. And when a company has these tools, they need to train everyone, including especially customer service, what a Bitcoin address is how to analyze a Bitcoin address or other crypto addresses on blockchain, like chain analysis. I'm trained and certified in chain analysis, so I train my clients how to conduct blockchain analytics with the address that a user will call and say, hi, this is my public key. I need a refund. So I train customer service, copy and paste that address that the user sent to you, pop it into chain analysis, ensure that it is $1,000 worth of Bitcoin, make sure this user is not lying to you, and then let the user know. Give me 15 minutes while I verify your public address public key, and then I can give you your refund and so forth. So tools are crucial.
Lourdes Miranda [00:27:54]:
So anyone out there and they can challenge me if they like. If you do not have blockchain analytics or some crypto platform to conduct compliance and blockchain analytics and investigations. You're not doing a good job. You need these tools. You need these platforms like Elliptic. I can go down the list.
Taylor Zork, CPA [00:28:17]:
Yeah.
Lourdes Miranda [00:28:18]:
Tr Labs.
Taylor Zork, CPA [00:28:20]:
Yeah. And I mean, just from an accounting perspective, I know that we leverage a lot of my clients are on EVM, like the Ethereum compatible EVM chains or clones or layer twos or things like that. We leverage Etherscan a lot because it's a query database of the blockchain. So it's not an analytical tool. It won't help you with any specific analytics, but you can at least view funds on chain, and you can confirm that, hey, this is my public key. I really sent this. And the wallet address you sent it to is truly one of our exchange wallets or something like that. So you can verify these things on chain, and you could even have that person prove that they own that wallet by signing a transaction from that wallet.
Taylor Zork, CPA [00:29:11]:
So it proves that they have the private keys to that. I think that, for me, I definitely need to get if I start working with clients where I need to do fraud investigations or things like that, chain analysis would definitely be one of the tools that I would elliptic is great.
Lourdes Miranda [00:29:31]:
TRM lab is great. Yeah, I'm glad you brought that up, because accountants, CPAs, tax professionals, tax attorneys whomever need these tools, you have your accounting and tax tools. You also need crypto tools. I remind clients that you can't use one vendor to conduct due diligence to do compliance and conduct investigations. That's not good. Compliance or enhanced due diligence. You need two or more platforms to conduct compliance and conduct crypto investigations. Yeah.
Lourdes Miranda [00:30:13]:
And they have to be compatible. So as a chief compliance officer, I'm responsible for I have a vendor list, and part of our policies and procedures is to have a vendor risk management list and policy and procedure. And I always share my vendor list with all my clients. Say, you cannot just use one platform to conduct compliance and investigations. Like you. You're a CPA? Crypto CFOs. You guys, your team have tax and accounting platforms, like you said, and I agree with you. You have to have another type of crypto platform to conduct due diligence and strong investigation.
Lourdes Miranda [00:30:53]:
You have to right. I'm all for obtaining certifications. I interview a lot of people for roles, and a lot of people say, yes, I understand chain analysis. I'm like, Well, I don't see that you're certified. Like, no, I don't need it. I've used no, no, I want your certification, because obtaining those certifications taylor I don't know if you have ever obtained a chain analysis certification. They're not easy. Yeah, you really have to study.
Lourdes Miranda [00:31:20]:
And I caught myself like, wow, I really have to study. I'm like, I really need to clamp down and study. Because of these chain analysis, I have a McAfee certification. They're not easy. Those exams are tough. So if I see that you have a certification that's valid, not expired, I'm going to consider you before I consider someone who tells me they have the experience, because I know if you are certified, you understand it.
Taylor Zork, CPA [00:31:49]:
Yeah, that makes sense. I know that you've touched on it already, but are there any additional emerging tech or tools in the crypto investigation realm that you're particularly excited about? If you've already mentioned them all, that's fine. Just curious if there are any emerging ones that you're looking at.
Lourdes Miranda [00:32:07]:
I'm looking at it now because thanks to crypto, CFOs, and you inspired me because I'm now looking into reaching out and networking with tax professionals, tax attorneys, because we do corporate investigations. January 2024, I'm starting a graduate program, getting a Master's in Accounting. I'm going to take my CPA exam. So thanks to you guys for that. So thanks to you and your Wednesday, coolers Wednesday, every week on Wednesdays, I've learned that you mentioned some tax software that I brought to the attention of some potential clients, like Soft Ledger, zen Ledger. Zen Suite.
Taylor Zork, CPA [00:32:50]:
Yeah, there's Zen Ledger, there's crypto, there's integral, there's legible, there's Entendre. There's a lot of them, and lots of them have different benefits, and some of them are more focused on tax, some of them are more focused on accounting. But they're really great sub ledgers that allow you to kind of codify and simplify the viewing of your on chain transactions.
Lourdes Miranda [00:33:16]:
Yeah, thanks to you guys, I also found Bitwave.
Taylor Zork, CPA [00:33:20]:
Okay.
Lourdes Miranda [00:33:22]:
I had a demo done on that for 30 minutes. It was great. And I'm trying to learn all these tax and accounting platforms because I'm trying to bring in some tax professionals as clients and accounting professionals as clients. So I'm learning as I go. There's also Crystal, there's a blockchain analytics software that I use as well. So I guess we listed a few out there for those in the audience who are listening. And books, I read a lot of books.
Taylor Zork, CPA [00:33:54]:
Nice, very nice. Okay, so as far as training and education, you've contributed to online course development and delivery. How important is continuous education for professionals in the rapidly evolving space? I know you mentioned that you love certifications because you feel like, yes, sometimes it's like a proof of knowledge, right? We're talking about proof of stake, proof of proof of zork. Let's get proof of knowledge here. Yeah. How important do you see that in the space?
Lourdes Miranda [00:34:27]:
Extremely important because the crypto ecosystem isn't going away and a lot of bad actors are using crypto to engage in nefarious activity, financing operations, financing terrorist operations, laundering money using crypto. It's extremely important, people, crypto is not going away. It's growing. Get web. Three NFTs. It just keeps going on and on and on. And believe it or not, being in law enforcement for so many years, in the intelligence community, for many years, I've. Learned one thing.
Lourdes Miranda [00:35:02]:
If bad actors are using a type of method, financial method, to finance any type of illicit activity, the US government is going to embrace it. It's not going anywhere. Because as long as bad actors are continuing using crypto and other platforms, we have no choice but to embrace it and stay ahead of the game. It's not going anywhere. I don't care what anybody says. It's not going anywhere.
Taylor Zork, CPA [00:35:28]:
Yeah.
Lourdes Miranda [00:35:30]:
And those tax professionals and CPAs and accounting professionals, they need to jump on it if they're not on it already. Because I know a lot of bad actors who are investing. They're trading, they're buying tokens and stablecoins and they're trading and investing, and they're using that kind of money to finance their nefarious activities.
Taylor Zork, CPA [00:35:57]:
So what advice might you give to accounting and tax professionals that are looking to delve into the world of crypto and Web Three study?
Lourdes Miranda [00:36:08]:
Take every certification that's out there. Crypto, CFOs. I'm looking forward to you guys building a tax and accounting platform to teach people like me who are non tax and accounting professionals about crypto in the accounting world, crypto net tax world. So I'm looking forward to more of those training sessions that you guys offer because I'm learning a lot about tax and accounting through you guys, which inspired my graduate degree.
Taylor Zork, CPA [00:36:37]:
That's great. I'm loving that you're going after the CPA exam. It's not an easy nut to crack, and I commend you for going after it when you already have a successful career elsewhere. Some might say that's a bit of self punishment, but you know what? I think that you're the woman to do it.
Lourdes Miranda [00:36:57]:
Thank you. And you guys published a book as well that I bought on Amazon.
Taylor Zork, CPA [00:37:03]:
Nice.
Lourdes Miranda [00:37:04]:
So updated in 2023, right?
Taylor Zork, CPA [00:37:07]:
Yeah, we just released the second edition this July, so we're really excited about that. It's kind of the framework for how our courses is going to go. And we're actually releasing our accelerator course here in another I think it's going to be announced in the next week or two where we will be doing a practical guide. Because I think one of the best ways that I learned crypto and Web Three was by actually doing transactions on chain and seeing the flow of funds in real time based on what I was doing. Because for me, that was what made it click for like, okay, this is how this flows. This is what this looks on Ether scan. This is what this looks like. And I think that it'll be a great course for anyone who wants to kind of get their feet wet without having to with having their handheld as well, because it can be intimidating as well in the industry.
Lourdes Miranda [00:37:59]:
Extremely intimidating. I mean, you brought up a good point about the type of investigations. There's the Bitcoin and Altcoin investigations. Then you have the Ethereum Blockchain investigations, whole different type of training, different certification. Very painful. Literally made me cry. I'm like, you got to be kidding me. This test, this exam is tough.
Lourdes Miranda [00:38:20]:
So, CPA exam, I'm ready for you. Because if I survive crypto and Ethereum certification examination and McAfee, that's a challenge in itself. So for those tax professionals, accounting professionals out there, one thing, you don't have to have an engineering or cybersecurity background to understand crypto transactions. I don't have one. Taylor, do you have an engineering no, no. And we understand those. Again, for those accounting professionals, tax professionals, take crypto compliance, crypto investigation courses that have nothing to do with tax or accounting. Learn what investigators like myself have learned out in the field, because I guarantee you, these bad actors, what we found discovered out in the field, you're going to see it in your tax documents, your accounting statements, your financial statements.
Lourdes Miranda [00:39:14]:
So don't just take accounting tax classes, courses or webinars. Take criminal investigations, crypto compliance, and learn how being proactive and reactive and the differences and how that will apply in your field and tax and accounting world.
Taylor Zork, CPA [00:39:34]:
That's really great advice. I think that ultimately, for me, if I can answer a question without having to ask the client too, obviously we want to have support from the client. But if I can look on chain and rather than ask a question about, oh, what's this wallet address for? And I can look at the wallet address and see that, oh, this is a smart contract. This contains a smart contract where it seems like deposits are being sent here, then I can at least frame my question to the client with additional information before I've gone and talked to them. And so that when I hear their response back, I can see if it fits with the narrative that I've already started to put together. Or maybe it's completely different, maybe I was wrong and then it furthers my own understanding of, okay, maybe I thought this was a smart contract, but it's not really, or something like that. So, yeah, I think that's a really good having a good investigative background for crypto is key because it's all public and out there. So if you can find it and do some know absolutely.
Lourdes Miranda [00:40:39]:
When I found crypto CFOs on LinkedIn, I'm like, okay, I don't have an accounting background, but I do my best to join you guys every week, every Wednesdays, I join your training sessions. I listen to your podcast. I bought your book. And I don't have an accounting background, but I need to understand because bad actors, they engage in accounting fraud, tax fraud. Here I am, and I appreciate you guys patience when I ask crazy questions because I don't have an accounting background.
Taylor Zork, CPA [00:41:09]:
No, but we love the compliance perspective. We love having that perspective from compliance because, as you say, it often gets overlooked in the crypto industry. Because it's a lot of young, ambitious kids or just young adults that are trying to move fast. And they have. A passionate they have an idea and they have a really good pep in their step and they're ready to go and they don't always stop and think about the bigger implications of what they're doing. So it's important to have that compliance.
Lourdes Miranda [00:41:40]:
Perspective that is correct. I have a quick story for you. Like you mentioned, these startups are built by the younger generation, young people, very ambitious people, and I give them a lot of credit because building startups are not easy. And I remember one of my clients hired me and I jumped one of their engineering calls. And I noticed everybody was leaning into the camera like, why is the chief compliance officer on our calls? And I was waving hello, I'm just listening in. And the VP of Engineering called me because, why did you jump on our calls? And I'm like, well, as the chief compliance officer, I need to understand how you're building the product so I can identify vulnerabilities to your platform. I need to understand how it's built and how it's worked. How it works.
Lourdes Miranda [00:42:29]:
So I can let you know that's not compliant. He's like, oh. So as a chief compliance officer, I have to remind engineers why compliance is there. Why am I the chief compliance officer on their calls? And there are many times when I tested their product, I identified a vulnerability. For example, one of my clients was in Israel and their product was not featured in the United States yet because they didn't register as a money service business or they didn't have any licenses to offer products and services in the United States. Me being in the US. I opened up an account, a wallet. I'm like, hey engineers, your system is flawed.
Lourdes Miranda [00:43:11]:
There's a vulnerability because I just opened up an account in the United States, which is a major compliance violation. So that's the reason why everybody needs to collaborate. I'm all for. So engineers out there, compliance is your friend. We're here to identify vulnerabilities to your platform. So when we join your calls, don't question it. We're just listening so we can test a product, understand how it's built, so we can identify, again, vulnerabilities and you can patch those holes.
Taylor Zork, CPA [00:43:43]:
Yeah, and I think it's really important, that collaborative aspect because as we know, the industry itself evolves so quickly, as we've been talking about throughout this call. And I think that you can only go so deep on every specific little topic within the even just in the small accounting sphere in crypto assets. It's like you could talk about we have one guy in our community, Patrick Camuso, who actually was a guest author on our book, as does he focuses primarily on NFT sales tax issues. So it's like very niche, very specific, but there's a lot there. And he can build a whole career over that and he can be the guy on that, right?
Lourdes Miranda [00:44:29]:
Yes.
Taylor Zork, CPA [00:44:29]:
And so being able to collaborate with different professionals and say, okay, I'm going to lean on this guy for my NFT sales tax issues or I'm going to lean on this person for their knowledge of tax law and maybe this company for crypto tax resolution or different things like that. You can be an inch wide and a mile deep on many different topics in this industry.
Lourdes Miranda [00:44:56]:
I'll give you another two examples. The second example was I jumped on a marketing and social media call. All these teams have their own calls, all their meetings, and they're like, why is the chief compliance officer on our call? And I'm waving hello, this is who I am. And I'm like, hey, you need compliance because as marketing people and business development, social media directors and advertisers, you need to know which countries and regions you're not allowed to promote in because they're sanctioned. And a lot of these marketing directors and social media directors don't know which countries are sanctioned because that's not their job. So I created a matrix, a threat matrix. Say these are the countries and regions you cannot promote products and services in and this is the reason why. And they appreciate that because they don't know.
Taylor Zork, CPA [00:45:48]:
Yeah. And they don't want to get in trouble. They want to make sure they're being effective with where they're targeting and how they're targeting because each of those jurisdictions may require different marketing plans for them as well. So why build one if you can't market there anyways?
Lourdes Miranda [00:46:02]:
Exactly. Because either the company is not licensed there or doesn't have not registered and the marketing director and social media directors don't know compliance. And that's why as a chief compliance officer, I jump on these calls and meet with the directors and vice presidents, say, hi, this is the reason why you need compliance on some of your calls to remind you where not to promote the products and services.
Taylor Zork, CPA [00:46:25]:
Right. Very cool. So just from the future predictions standpoint, where do you see the intersection of compliance investigations in Cryptocurrency in the next five or ten years?
Lourdes Miranda [00:46:40]:
Five or ten years? The intersection is collaboration is in collaboration. Like we were talking, everyone needs to be in the picture. That's why I'm a firm believer having town hall calls once a week, twice a month, to let every team describe with every team what's going on, why compliance is doing this, why the investigations team is doing this, engineers are doing this, product developers are doing this. You have to collaborate, especially in the crypto ecosystem because crypto is global. You cannot have the marketing and engineering team in London not know what's going on in the US. And vice versa.
Taylor Zork, CPA [00:47:29]:
Right.
Lourdes Miranda [00:47:30]:
Collaboration is key and communication.
Taylor Zork, CPA [00:47:32]:
Yeah. And then you mentioned before, I know that you have a spread, an Excel doc where you have the different jurisdictions that your clients are in. So how do you stay updated and ahead of the curve when it comes to getting yourself informed on everything that's going on within the industry.
Lourdes Miranda [00:47:55]:
Well, as you know, it's not easy.
Taylor Zork, CPA [00:47:57]:
Yeah.
Lourdes Miranda [00:47:59]:
That's why when I have a client that offers products and services throughout the world, I place country managers to keep me posted on what's going on. I literally have calls on Monday, it's Greece, tuesday's, Nigeria, wednesday's, London and so forth. Hey, what's going on? So I can update the Excel spreadsheet on regulations globally and laws, especially accounting and tax laws. Right? Again, it's not easy. I listen to podcasts like this. Podcasts are great because I go to the gym, pop in a podcast on crypto, and listen while I'm working out, reading books like your book. Whoa. I've joined so many professional organizations just to keep up with crypto is not even funny.
Lourdes Miranda [00:48:51]:
I'm like, half my paycheck is paying these professional organizations the membership fees because these professional organizations, they offer webinars and conferences about crypto, NFTs Blockchain, you name it. Join meetup groups in your area, attend conferences, attend seminars. LinkedIn those out there who don't have security restrictions. Like I had at one time, I had to get permission to join LinkedIn, believe it or not. Join LinkedIn. You've got to join LinkedIn because you guys, every Wednesday I literally go out of my way to try to make your Wednesday calls just to hear, even though I have no clue what you're talking about. As long as I hear tax and accounting words in my head, I'm learning, right? Take advantage of technology, go to the gym, listen to podcast, LinkedIn. Do you have any other suggestions besides what I've mentioned? Taylor.
Taylor Zork, CPA [00:50:00]:
I'm on multiple different I have a home page that pulls up like CoinDesk and a few other great sites that have really good web, three news, so I'm looking at that sort of stuff. I have Google alerts for crypto, plus accounting and crypto, plus tax that I get in my email for links for stuff that has been related to that on a couple days. A know, the only YouTuber that I cut out YouTube recommend to people is Guy from Coin bureau. Sometimes he has hot takes, but I watch his weekly roundup videos every Monday. It's about 20 minutes, and they kind of talk about the industry news, what happened in the previous week. He also does deep dives on things like when the Fed chair is giving a speech or when there's new regulatory stuff us focused. He's based out of the UK, but he does a lot of stuff with the US just because it has such a big voice in the crypto space. I listen to that.
Taylor Zork, CPA [00:51:12]:
It's entertaining. And he doesn't have any sponsors, so there's no ads on those. It's nice, too, because you kind of get the sense that he's a little less biased because you're not getting paid for it. But I know he has brand deals where he gives discounts on his page. But yeah, he has really good news and I feel like it's usually pretty kind of neutral and not politicized. Those are my kind of main news sources.
Lourdes Miranda [00:51:43]:
I like how you brought up setting up Alerts. I'll have to touch base with you about the accounting and tax alerts because when I start grad school for my accounting degree, graduate degree, I'm going to have to look into that. That's a good point. Alerts and YouTube, I don't know about you, but you know what I really follow on LinkedIn, I follow chain analysis, analytic, and TRM labs. They produce great statistics, great methodologies, great trends, and when they publish an article, I literally download it and start scanning it. So I look out for those. Those help me what's going on with trends, methodologies, anomalies emerging technologies that bad actors are using to engage in nefarious activity and finance their operations. So yeah, chain analysis, elliptic, and TRM labs, I read those all the time.
Lourdes Miranda [00:52:41]:
I do. I make an effort to read those because to me they're credible because I know them. I don't read everything on the Internet, but I do read chain analysis, TRM lads, and elliptic articles. And you have to have a business email to download the reports. They have really great reports. And again, I know them because I work with them in the intelligence community as well as in law enforcement. So I know who the writers are. To me, they're credible.
Taylor Zork, CPA [00:53:09]:
Yeah, no, that's really good because I think that especially from an accounting and tax perspective, having that type of news that's more directed to that kind of focus is good as well. Because anything that's popping up on chain, that is either an evolution or it's a new way to investigate or new way. Those seem like great news sources as well. So I'll definitely give those a follow.
Lourdes Miranda [00:53:35]:
Especially crypto. CFO is what you publish. I look at that as well because I know you're credible.
Taylor Zork, CPA [00:53:40]:
Cool. Well, closing thoughts now. So if there's one key takeaway that you'd like listeners to have from this conversation, what would it be?
Lourdes Miranda [00:53:52]:
Embrace crypto. It's not going you know, for those out there that ignore it, don't want to deal with it, retire. Because crypto is across the board. Academia, the medical field, the US military is considering blockchain to collect military mean. Yeah, it's not going anywhere, the crypto ecosystem. So that's the last thing I can one key takeaway embrace the crypto ecosystem.
Taylor Zork, CPA [00:54:22]:
And if listeners either want to contact you for services or your compliance expertise, because I know you do consulting work thank you. Or if they want to kind of follow your work, writings, insights, where can they look at you?
Lourdes Miranda [00:54:40]:
They can follow me on my LinkedIn. Lourdes c. Miranda c's. Carmen. I also have a website, it's Lourdes Miranda IO, but you can find most of my work on LinkedIn. As a matter of fact, next week I'll be at a conference. I'm speaking at a conference for 2 hours on how to build a crypto investigation. So follow me on LinkedIn.
Taylor Zork, CPA [00:55:04]:
Sounds great. Well, thank you so much, Lourdes, for your time today. Really enlightening conversation. And I always love to hear about your perspective from the compliance perspective, because sometimes it flies in the head of what you see DeFi being built for. Because it's like you have people who you want to know who everyone is and then DeFi people sometimes want to be anonymous. But I love having conversations with you because it brings that perspective into it as like, okay, how do we look at this from an investigative standpoint? How do we know who these bad players could be, these bad actors could be, and how do we prevent them from harming us or harming the businesses that we work for?
Lourdes Miranda [00:55:52]:
Yeah, like, you know, the other KYC know your criminal. You have to understand how they think in order to defeat. So but thank you, Taylor and crypto CFOs for having me speak on your podcast.
Taylor Zork, CPA [00:56:05]:
Yeah, yeah, absolutely. Our pleasure. And we'll hopefully see you this Wednesday.
Lourdes Miranda [00:56:09]:
But anyway, I'll be there.
Taylor Zork, CPA [00:56:11]:
Yeah, sounds great taking notes. Yeah, well, thanks again and Lourdes, and we'll talk to you soon.
Lourdes Miranda [00:56:17]:
Bye, Taylor.
Taylor Zork, CPA [00:56:18]:
Take care.