The End of Operation Chokepoint 2.0: A Guide for Compliance Departments
The Crypto Banking Survival Guide: A Tactical Handbook
Executive Summary (TL;DR)
- Proactive AML/CFT: Implement AML tools (Chainalysis, TRM Labs), set up documented and reproducible risk scoring, and establish internal SLAs for alert processing tailored to your resources.
- Banking Diversification: Immediately start opening accounts in at least two reserve banks in different jurisdictions (e.g., EU, Singapore, Switzerland). The process takes 3–6 months. Conduct full partner due diligence.
- Prepare an "Emergency Kit": Compile and quarterly update a package of key documents (AML policy, UBO structure, audit report) ready to be sent to a regulator or bank within one hour. Appoint a person responsible for version control. (See Appendix E).
- Develop a Response Protocol: Create a step-by-step plan for the first 72 hours after a freeze, including an escalation matrix, communication templates for banks, regulators, and clients, and a legal strategy.
- Measure and Test: Regularly conduct stress tests simulating an account block. Track key KPIs: "Switch-to-Reserve-Bank Time" (target: <48 hours), False Negative Rate (target: <1%), and bank inquiry response time.
Introduction: From Hypothetical Risk to Operational Threat
For crypto company executives, "debanking"—the unilateral termination of banking services—has turned into a real threat to business continuity. Events involving Silvergate and Signature Bank, as well as ongoing investigations under the so-called Operation Chokepoint 2.0¹, show that financial institutions continue to close accounts of crypto companies, citing high risks and regulatory pressure.
Target Audience and Scale: This guide is intended for Compliance Officers (MLRO), CFOs, and legal departments in crypto companies, including exchanges, custodial services, wallets, and Payment Service Providers (PSP). The principles scale from startups building their first compliance program to large corporations strengthening banking relationships.
Geographic Coverage: The guide is focused on companies operating in jurisdictions with developed regulation: USA, EU, UK, Switzerland, and Singapore.
The goal of this guide is to provide a structured, practical action plan to minimize debanking risks. Instead of generalities, we offer specific KPIs, templates, and legal tactics to build a resilient financial infrastructure.
¹ A collective term used in the crypto industry to describe coordinated efforts by US regulators to restrict crypto companies' access to banking services. Source: Forbes, "Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs".
Section 1. Proactive Compliance Infrastructure
Effective protection against debanking begins with creating a transparent and documented system capable of identifying and neutralizing risks before they catch the bank's attention.
1.1. Roles, Responsibilities, and Escalation Matrix
Clear distribution of responsibility is the foundation of a rapid reaction. Key roles (Compliance Officer/MLRO, Analyst, Lawyer, CFO) must be supplemented by an escalation matrix for incident management.
Escalation and Responsibility Matrix
| Level / Event | Action Owner | Communication Owner | Owner of "Emergency Kit" Versioning | Contacts |
|---|---|---|---|---|
| Level 1: Bank Information Request | Compliance Analyst | MLRO | Compliance Officer | compliance-team@, mlro@ |
| Level 2: Transaction Freeze | MLRO | MLRO / Legal Department | Legal Department | legal@, mlro@ |
| Level 3: Account Block | CFO, CEO | Legal Department (External), CEO (Internal) | Legal Department | cfo@, ceo@, legal@ |
| Level 4: Regulatory Complaint Filing | External Counsel | External Counsel | Legal Department | external.counsel@ |
1.2. Technical Due Diligence and Operational Workflow
Tools: Chainalysis, TRM Labs, Crystal Blockchain, Elliptic.
Operational Workflow for Transaction Processing:
- Transaction Entry: System receives transaction data.
- Automated Screening: Transaction is checked against risk-scoring rules.
- Decision Based on Risk Score:
| Risk Score | Action | Responsible |
|---|---|---|
| > 85 (High Risk) | Automated block, immediate escalation, SAR/STR preparation. | MLRO |
| 60–85 (Medium Risk) | Pause, create alert for manual review. | Compliance Analyst |
| < 60 (Low Risk) | Automated approval. | System |
SLA and KPI Justification: Strict SLAs and target KPI values must be justified and adapted to the company size, transaction volume, and team resources. The values below are examples based on industry benchmarks.
| Metric | Startup (< 1k trans./day) | Large Exchange (1M+ trans./day) | Justification |
|---|---|---|---|
| Initial Assessment SLA (High risk) | < 4 hours | < 1 hour | Rapid reaction required to minimize damage. Depends on automation and headcount. |
| Decision-Making SLA (Medium risk) | < 24 business hours | < 8 business hours | Balance between speed and quality of analysis. |
| Target False Positives Rate | < 25% | < 15% | Decreases as the risk model is calibrated on big data. |
| Target False Negatives Rate (FNR) | < 1.5% | < 1% | Calculated via retrospective analysis of a random sample (back-testing). Critical metric for the bank. |
1.2.1. Risk Score Calculation Mechanics: Numerical Examples
Risk Score must be documented and reproducible.
General formula:
Risk Score = Σ (Factor Weight × Factor Score)
where the sum of all factor weights equals 100%.
Example 1: Calculation for a Crypto Exchange Transaction
- Input Data: User withdraws 1.5 BTC to an unknown address.
- Factors, Weights, and Scores (0–100 scale):
- Destination Address Link to Risky Services (Weight: 50%): Address has an indirect link (2 hops) to a mixer. Score: 70.
- User Geography (Weight: 30%): User is from a low-risk country (Germany). Score: 20.
- Behavioral Analysis (Weight: 10%): Transaction amount is 5 times the average withdrawal. Score: 80.
- Source of Funds (Weight: 10%): Funds came from a verified internal address. Score: 10.
Calculation:
- (50% × 70) + (30% × 20) + (10% × 80) + (10% × 10)
- = 35 + 6 + 8 + 1
- = 50
Result: Risk Score = 50. Transaction processed automatically (low risk).
Example 2: Calculation for a Payment via PSP
- Input Data: Merchant (online casino) receives a €5,000 payment from a high-risk jurisdiction.
- Factors, Weights, and Scores (0–100 scale):
- Merchant Risk Profile (Weight: 40%): Online casino. Score: 90.
- Payment Source Geography (Weight: 40%): Country on the FATF "grey list". Score: 75.
- Payer Transaction History (Weight: 20%): First payment. Score: 60.
Calculation:
- (40% × 90) + (40% × 75) + (20% × 60)
- = 36 + 30 + 12
- = 78
Result: Risk Score = 78. Transaction suspended, alert created for manual review (medium risk).
Section 2. Strategic Risk Management
2.1. Diversification of Banking Partners
Reliance on a single bank is a single point of failure.
- Action Plan: Immediately start the process of opening accounts in at least two reserve banks. Plan for this to take 3–6 months and require significant resources.
- Partner Selection: Use the due diligence checklist (see Appendix B).
- Correspondent Risk Management: Check with your bank which correspondent banks process the payments. Problems at their level (e.g., BNY Mellon, J.P. Morgan) could affect you too.
2.2. Jurisdictional Specifics: Escalation and Regulation
| Jurisdiction | Key Regulator | Regulatory Framework | Escalation Channel | Features |
|---|---|---|---|---|
| USA | OCC, FDIC, Fed | Bank Secrecy Act (BSA) | Regulator online portals (HelpWithMyBank.gov) | Process prone to litigation. High legal costs. |
| EU | EBA, National Regulators (BaFin, AMF) | AMLD6, MiCA | National Regulators, then EBA | More bureaucratic process. Focus on procedural compliance. |
| UK | FCA | The Money Laundering Regulations (MLRs) | Financial Ombudsman Service, then FCA | Balanced approach combining formal procedure and mediation. |
| Switzerland | FINMA, SRO | Anti-Money Laundering Act (AMLA) | Complaint to SRO, then FINMA | High due diligence requirements. Banks have broad powers. |
| Singapore | MAS | Payment Services Act (PSA) | Direct complaint to MAS | Regulator-centric model. MAS decisions carry significant weight. |
2.3. Data Security During Transfer (GDPR/PDPA)
When transferring client data to a bank or regulator, data protection laws must be observed. This requires legal grounds and technical measures.
Personal Data Transfer Matrix
| Jurisdiction | Legal Basis for Transfer | Recommended DPA Wording | Technical Measures |
|---|---|---|---|
| EU (GDPR) | Art. 6(1)(c): processing is necessary for compliance with a legal obligation (AML/CFT). | "The Processor shall process personal data only to the extent necessary to comply with the Controller’s legal obligations under [applicable AML law]." | Encryption in transit (TLS 1.2+), data minimization, access control, logging. |
| Singapore (PDPA) | Third Schedule, Part 3: processing is necessary for compliance with laws or responding to law enforcement requests. | "The Data Intermediary agrees to process personal data strictly for the purposes of complying with its obligations under the Payment Services Act…" | Same as GDPR. |
| USA | GLBA, BSA: allow transfer for compliance with federal laws. | "Data sharing is conducted as necessary to comply with federal laws, including the Bank Secrecy Act, and for law enforcement purposes." | Same as GDPR. |
2.4. Financial Resilience: Insurance and Escrow Accounts
To protect operational liquidity, consider using escrow accounts to segregate client and operational funds, as well as insurance products (e.g., crime insurance) covering risks related to compliance and security.
Section 3. Anti-Crisis Plan for Debanking
3.1. Operational Protocol: First 72 Hours
| Time | Action | Responsible |
|---|---|---|
| T+0 hour | Block detected. Escalation per matrix (CFO, CEO, Legal, MLRO). | Any employee |
| T+1 hour | Communication with Bank: Send official request for reasons of block (Appendix A, Template 1). | Legal Department, MLRO |
| T+2 hours | Internal Audit: Collect transaction data for 90 days. Prepare reports. | Compliance Analyst |
| T+4 hours | Reserve Activation: CFO initiates switch to reserve bank. Notify clients of possible delays (Appendix D). | CFO, Communications Dept |
| T+8 hours | Emergency call with external lawyers to develop strategy. | Management, Legal Dept |
| T+24 hours | Prepare and send the full "Emergency Kit" to the bank (Appendix E). | Legal Dept, MLRO |
| T+48 hours | If no substantive response, file complaint with regulator (Appendix A, Template 2). | External Counsel |
| T+72 hours | Assess operational stability. Complete transition to reserve channels. | CFO, CTO |
3.2. Legal Actions: Timelines and Expectations
- Filing a Regulatory Complaint: Recommended within 30 days of the incident.
- Response Times: The regulator usually confirms receipt within 5–10 business days. A substantive investigation can take 3–9 months.
- Litigation Steps: If the regulator does not help, a lawsuit against the bank for breach of contract is possible. This is expensive (starting from $100,000) and lengthy (1–2 years).
3.3. Analysis and Negotiation of Bank Agreement
Use this checklist for both analyzing existing and negotiating new contracts.
| Contract Clause | What to look for / Negotiation subject | Sample wording to protect your interests |
|---|---|---|
| Termination Clause | Notice period should be at least 60–90 days, not "immediately at bank's discretion". | "This Agreement may be terminated by either party with a minimum of ninety (90) calendar days’ prior written notice to the other party." |
| Suspension of Services | Clear definition of grounds for suspension (e.g., only upon official request from a regulator). | "The Bank may suspend services only upon receiving a legally binding order from a competent regulatory authority or court, and shall notify the Client within 24 hours of such suspension." |
| Information Requests | Establish SLA for bank responses to your inquiries and reasonable timeframes for providing info from your side. | "The Bank shall respond to Client’s information requests regarding account status within two (2) business days. The Client shall provide information requested by the Bank within five (5) business days." |
| Material Adverse Change | Exclude vague wording allowing the bank to terminate due to "market condition changes". | "A Material Adverse Change shall not include general market volatility or changes in the Bank’s internal risk appetite not directly related to the Client’s specific compliance profile." |
Section 4. Testing, Drills, and Effectiveness Evaluation
4.1. Stress Test Scenarios (Quarterly)
| Scenario | Expected Team Actions | Target Reaction Time |
|---|---|---|
| 1. Sudden Account Block | Execution of first 24-hour protocol. Check speed of doc collection and lawyer contact. | 4 hours for collecting "Emergency Kit" and sending first request. |
| 2. Correspondent Bank Rejection | CFO initiates transition to alternative payment route via reserve bank. | 8 hours for restoring operations. |
4.2. KPIs for Effectiveness Evaluation
- Switch-to-Reserve-Bank Time: Target < 48 hours.
- Incident Resolution Time (Unblocking): Tracking for legal strategy effectiveness analysis.
- Reserve Account Opening Success Rate: > 80% of submitted applications.
4.3. Drill Effectiveness Evaluation
After each stress test, a report is filled out to identify weak points.
Drill Evaluation Matrix
| Evaluation Criterion | Target Metric | Actual Result | Status (Pass/Fail) | Comments |
|---|---|---|---|---|
| Emergency Kit Collection Time | < 1 hour | 1 hour 45 minutes | Fail | Audit document was an old version. |
| Bank Request Submission Time | < 1.5 hours | 1 hour 10 minutes | Pass | |
| Client Notification Time | < 4 hours | 5 hours | Fail | Delay due to text approval. |
| Successful Test Transaction via Reserve Bank | < 8 hours | 6 hours | Pass |
Post-Drill Report Template:
- Date and Scenario:
- Participants:
- Key Results (based on matrix):
- Identified Issues: (e.g., outdated lawyer contact info, slow client message approval).
- Remediation Plan: (e.g., appoint a person responsible for contact updates, pre-approve templates).
- Deadline:
Section 5. Real-World Scenarios: Lessons from Practice
What Didn't Work (Case 1): A fintech startup used a single "crypto-friendly" bank in the EU. After a change in leadership, the bank abruptly changed policy and closed all crypto-client accounts with 30 days' notice. The company had no reserve account, which led to a freeze of operational activity for 3 months.
- Lesson: "Crypto-friendly" status is a temporary state, not a guarantee. Proactive diversification is mandatory.
What Worked (Case 2): A large exchange received a vague inquiry from a bank regarding "unusual activity". Instead of a short reply, the legal department within 6 hours sent the full "Emergency Kit": current AML policy, recent audit report from a Big Four firm, and a detailed breakdown of the 10 largest transactions for the period. The bank closed the inquiry without further questions.
- Lesson: Radical transparency and demonstrated competence can de-escalate a situation before it becomes critical.
Conclusion
In an environment of growing regulatory pressure, proactive and deeply integrated compliance is the foundation of survival and growth. Companies investing in robust processes, diversification, and crisis preparedness will not only protect themselves from debanking but also gain a competitive advantage by demonstrating reliability to partners and regulators.
Appendices
Appendix A: Templates for Communication with Bank and Regulator
Template 1: Official Request to Bank for Reasons of Block
[On Company Letterhead]
To: [Name of Bank], Compliance Department
Date: [Date]
Subject: Official Inquiry Regarding Restrictions on Operations for Account No. [Account No.]Dear Sir/Madam,
By this letter, we, [Company Name], inform you that on [Date] we detected a block on our corporate account No. [Account No.]. In accordance with our banking service agreement, we request that you provide within 24 hours an official written explanation stating the exact reasons that served as the basis for the block. Please specify:
- Specific transactions or operations that triggered suspicion.
- Legal norms or contract clauses that, in the bank's opinion, were violated.
- Procedure and conditions for lifting the restrictions.
Our company adheres to the highest AML/CFT standards and is ready to provide any documents to clarify the situation.
Sincerely,
[Your Name, Title]
Template 2: Sample Regulatory Complaint (Example: FCA, UK)
[On Company Letterhead]
To: Financial Conduct Authority (FCA)
Date: [Date]
Subject: Complaint Against the Actions of [Bank Name] Regarding the Block of Account No. [Account No.]1. Complainant Information: [Company Name, Registration Number, Address].
2. Bank Information: [Bank Name, Address].
3. Essence of Complaint: On [Date] [Bank Name] unilaterally and without proper notice blocked our corporate account. To our official request dated [Date] (Appendix 1), we received no response / received a formal response without specific grounds, which is a violation of the "Treating Customers Fairly" principle.
4. Justification: We consider the bank's actions unlawful. Our activities fully comply with The Money Laundering Regulations 2017. Our AML program has undergone an independent audit (Appendix 2).
5. Requirement: We request an investigation into the legality of the bank's actions and to compel it to provide a motivated legal justification or lift the restrictions.Appendices:
- Copy of correspondence with the bank.
- AML program audit report.
- Key compliance documents (AML Policy, Risk Assessment).
Sincerely,
[Your Name, Title]
Appendix B: Due Diligence Checklist for Choosing a Reserve Bank
- Regulatory Status: Does the bank have a license in a reputable jurisdiction? What is its reputation with the regulator?
- Experience with VASPs: Does the bank have public case studies or an official policy for working with Virtual Asset Service Providers?
- Financial Stability: Analysis of the bank's latest financial reports, its credit rating.
- Correspondent Network: Through which correspondent banks do its international payments pass?
- Technological Compatibility: Does the bank's API support integration with your systems?
- Fee Structure: Are fees for maintenance, international transfers, and compliance checks transparent?
- Compliance Requirements: How realistic are the bank's AML/KYC requirements and do they align with your procedures?
- Quality of Service: Is there access to a personal manager and competent support?
- Account Opening Time: What are the realistic timeframes for opening an account after submitting all documents?
Appendix C: Key Resources
- FATF (Financial Action Task Force):
https://www.fatf-gafi.org - FinCEN Guidance (FIN-2019-G001):
https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-certain-business-models - MiCA Regulation:
Official Journal of the EU - FCA, Cryptoassets:
https://www.fca.org.uk/firms/cryptoassets - MAS, Payment Services Act:
https://www.mas.gov.sg/regulation/acts/payment-services-act
Appendix D: Client Communication and PR Templates
Template 1: Notification for Clients (Email/SMS)
Subject: Important Information Regarding Delays in Processing [Fiat] Transactions
Dear Client,
We are currently experiencing temporary delays in processing [Deposits/Withdrawals] in [USD/EUR]. Our team is already working to resolve the issue with our banking partners. All your funds are safe. Crypto trading is functioning normally. We will keep you updated.
Thank you for your patience.
The [Company Name] Team
Template 2: Internal Support FAQ
-
Q: What happened?
A: We are experiencing a technical issue with one of our banking partners, causing delays in fiat operations. We are working on switching to reserve channels. -
Q: Is my money safe?
A: Yes, all client assets are completely safe. The issue only affects the speed of transaction processing. -
Q: When will it be fixed?
A: We expect operations to resume within [e.g., 24–48] hours. Please follow our official announcements. -
Q: Can I cancel my transaction?
A: [Company Cancellation Policy].
Template 3: Press Script (Reactive)
Statement: "We confirm that we are experiencing temporary difficulties in processing fiat payments due to issues on the side of one of our banking providers. We have pre-emptively diversified our banking infrastructure and are currently migrating flows to reserve channels to restore full operations as quickly as possible. All client assets are safe. This is an operational issue unrelated to security or the financial health of our company."
Appendix E: "Emergency Kit" Checklist
This package of documents must be compiled, updated, and available to key employees for submission within 1 hour.
| Document | Update Owner | Date of Last Update | Storage Location (Link) |
|---|---|---|---|
| 1. Corporate Documents | |||
| Certificate of Incorporation | Legal Dept | [Date] | [Link] |
| Articles / Memorandum of Association | Legal Dept | [Date] | [Link] |
| Ownership Structure (UBO) | Legal Dept | [Date] | [Link] |
| 2. Licenses and Registrations | |||
| VASP License / Registration | Compliance Officer | [Date] | [Link] |
| FIU Registration | Compliance Officer | [Date] | [Link] |
| 3. Compliance Documents | |||
| AML/CFT Policy (Current Version) | MLRO | [Date] | [Link] |
| Company Risk Assessment | MLRO | [Date] | [Link] |
| Latest Independent AML Audit Report | CFO / MLRO | [Date] | [Link] |
| 4. Financial Documents | |||
| Latest Audited Financial Report | CFO | [Date] | [Link] |
| Bank Statements for last 6 months | CFO | [Date] | [Link] |