The government of the Republic of the Marshall Islands is creating its own digital currency, the Marshallese Sovereign (SOV), a fiat currency, to be the government’s official legal tender. Neema, a FinTech company, was engaged by the government to create, operate, and support the new SOV currency with built-in financial crime compliance controls to verify customers’ identities and the source of funds with the goal to make SOV a transparent, non-secretive currency to dissuade its use for criminal or illicit purposes. Neema required assistance to put the appropriate controls in place.
For this engagement, Guidepost registered with the U.S. Department of Justice as an agent of the Republic of the Marshall Islands. Our team supported Neema’s efforts to build into the SOV programming state-of-the-art controls to meet all U.S. Bank Secrecy Act and anti-money laundering requirements, and developed a framework by which those controls could be implemented. In its role as a foreign agent, Guidepost arranged in-person meetings with relevant U.S. government stakeholders who may be involved in determining whether the SOV could be used in the United States and could be exchanged into U.S. dollars. Guidepost leveraged these meetings to present the unique compliance controls to representatives of various regulatory agencies, and explain how they addressed the same regulatory concerns found in traditional fiat currencies.
Benefit to the Client
The compliance consulting services we offered on regulatory issues will help the Marshall Islands introduce the world’s first fair and sustainable digital government currency. Traditional financial crime compliance controls used in paper money are built into the digital currency through a protocol that ensures all SOV users undergo compliance checks with a registered verifier while keeping user details private. The protocol developed by Guidepost allows the Marshall Islands to utilize the flexibility of blockchain while mitigating AML and sanctions risks inherent in that technology, thus addressing and resolving regulatory concerns and requirements.