Kyle Daddio - AML & Sanctions Expert

Q&A With Kyle

What is the focus of your practice?

I am one of the leaders of our Regulatory Compliance and Financial Crimes practice, which focuses on advising financial firms on their financial crimes compliance programs. I have also been retained as an expert in enforcement and litigation matters related to AML and sanctions regulations.

What types of clients do you work with, and how do you provide value to them?

Our clients include banks, broker dealers, registered investment advisors (RIAs), fintechs, and digital asset firms. We support them in developing and enhancing their AML, fraud, sanctions, and trade surveillance programs, and serve as trusted advisors in supporting remediation efforts due to pending enforcement actions and in response to consent orders. We have a team of AML and sanctions experts that include former regulators and financial institution compliance executives. I personally was hired in response to a multi-regulator enforcement action as the first solely dedicated Chief AML Officer for one of the largest online global trading firms. 

What makes you particularly qualified as an expert in regulatory compliance and financial crimes?

I have had the unique experience of working within three sides of the financial crimes landscape: within the government as an investigator, as a Chief AML Officer within a financial institution, and as a consultant advising financial institutions. These experiences have allowed me to understand how all sides perceive and address AML and sanctions regulations.

I am able to relate directly to my client’s situation, as I have sat on their side of the table having to respond to regulators and defend an AML and sanctions program. I have also sat on the government side of the table as the interviewer, so I can provide insight into how and why the government regulators and investigators may approach a situation. And I have advised many different types of financial institutions on their financial crimes compliance programs, so I can provide valuable insights into what program elements and processes have been successful and how to present and discuss your program to the regulators to gain favorable outcomes.

You have focused a lot of your practice within the cryptocurrency space. How do you see that space evolving in the next five to ten years?

I think the most deciding factor over the next five-plus years is how much actual regulation takes shape and which government agency will own that regulatory responsibility. We have seen that certain regulatory agencies are pursuing discussion and trying to work with digital asset firms, while other agencies are leaning more in the direction of regulation by enforcement.

I think digital assets are here to stay and that market participation will likely only continue to grow, and as regulations move forward there are two main things that will occur: 1) larger, more sophisticated firms that have strong compliance frameworks in place will begin to acquire the smaller firms that are not able to keep up with expanding regulations, and we will have a consolidation in the market, and 2) depending on how the regulations in the U.S. take shape and how long it takes to implement them, digital asset firms will continue to move operations out of the U.S. and into countries where regulations are in place and more favorable.

Many of the clients we are working with are taking the approach of acting as if they are fully regulated broker dealers and futures commission merchants, and they are taking the time to establish meaningful and effective AML and sanctions controls before they accept their first customer.

What was one of your more notable projects and why?

I have had the opportunity to work with several organizations that are under intense scrutiny from regulators with high demands to remediate their AML and sanctions programs. Unfortunately, due to the nature of the work, with most of the engagements I have led I am unable to provide specifics.

What I can say is that when an institution has been given an enforcement action or consent order related to AML and sanctions, the pressure is incredible on those responsible for remediating the programs. These engagements are typically multi-year projects, in which you are balancing your relationship with the client and your relationship with the regulator, and are balancing assisting the client with maintaining a positive relationship with the regulator.

Having been in that situation personally, I always look forward to the opportunity to work with the individuals responsible for the remediation efforts and supporting them in that long journey with the regulators. It is an arduous process with a significant amount of pressure on individuals and teams to perform day in and day out.

What has been the most rewarding part of your career?

My time with the FBI in the Counterterrorism Division has been the most rewarding part of my career. I had the privilege of being selected to serve in the Middle East as a member of the Joint Interagency Task Force, part of the U.S. Joint Special Operations Command, and to serve alongside our service men and women in support of Operation Iraqi Freedom and Operation New Dawn. I was also privileged to serve as a member of the FBI’s High Value Detainee Prosecution Task Force in Guantanamo Bay, where we conducted terrorist financing investigations on some of the most prominent individuals and cases of financial terrorism in U.S. history.

How has your FBI involvement furthered your career?

I was able to learn an incredible amount from some great and very talented people. The most important lesson I have taken with me is that you are working for something greater and that your work has a larger impact beyond what you may initially think. The FBI has a strong alumni network that takes great pride in what they have done and has a mutual respect for those who have worked not only for the FBI but within federal law enforcement.

Having FBI experience as a credential on my career resume has allowed me to become involved with some incredible organizations and gain experiences that likely would not have been possible had I not been a part of the FBI. There is a recognition and respect that comes along with having worked with the FBI, an understanding of the type of work and experience that you cannot get in the private sector, and I take great pride in upholding that reputation and respect and am very grateful to have been given the opportunity to start my career with such a prestigious organization.

What are the biggest lessons you have learned in your career? What guidance would you give to people early in their career that are pursuing a similar career path? 

Take chances and risks on yourself and get comfortable being uncomfortable. A job in financial crimes is not like being an accountant or physician where there are specific college degrees and career paths to follow. The professionals in the financial crimes field who have been successful come from all backgrounds, both educationally and professionally.

In this field, I believe nothing beats experience, and my best guidance to those early in their career within financial crimes is to find ways to work on different projects, cover different topics, and take on new roles. Regulations are constantly evolving, and the landscape of client needs is ever changing. As you get further along in your career, the more relatable experiences you have, the better you will be able to serve your clients and the more confidence you will have in your interpretation of situations and decision making.

What do you want people to know about you that they couldn’t learn from your LinkedIn profile?

The sport of lacrosse completely changed the trajectory of my life and led me to where I am now. I come from a baseball family, but I got bored with it in middle school, so in high school I decided to try lacrosse and ended up getting a scholarship to play in college.

I was injured my senior season, so I elected to play a fifth year and earn an M.B.A., foregoing a job opportunity in wealth management. During graduate school, the head of the FBI’s Counterterrorism division happened to be an alumnus of my university and came to the athletic department looking to interview qualified athletes for open positions. I took the interview, received an offer, and spent nearly seven years with the FBI. I was also a member of the Italian National Lacrosse team from 2003–2008 and had the honor of competing in the 2003 European Championships and the 2006 World Games. The sport of lacrosse has taken me to many countries and allowed me to meet many great people, and I am in the position I am today because I tried something new and took a chance.

What was the best concert you have ever been to?

Billy Joel at Wrigley Field, 2015.

If you could have dinner with any famous person in the world, who would it be and why?

Muhammad Ali. I have always been a fan of his athletic achievements and how he carried himself. My parents always preached values. We talk to our kids now about the importance of values, and I think he exemplified that in how he lived his life. He had strong confidence, knew what he believed in and what was important to him, and made very difficult decisions at critical points in his life that showed his deep commitment to his values. Plus, he had an incredible amateur career that most people don’t know about, won Olympic gold at age 18, and was a great showman with an incredible sense of humor.