How Crypto Businesses Can Spot Money Laundering | Anti Money Laundering Cryptocurrency

Crypto companies can not afford to ignore (AML) Anti Money Laundering Cryptocurrency regulations. Fines are increasing and the rules have become stricter.

In one of the biggest crypto-heists, the Japanese cryptocurrency exchange, Coincheck, suffered a $500,000,000 loss. This led to money laundering as the infiltrators sought to hide the source of the illicit funds.

Now we will explore this topic.

AML: What is it and why does AML affect cryptocurrency-businesses

Often seen as a matter of national (and even international) security, money laundering in cryptocurrency is a risk you can’t ignore. AML in cryptocurrency carries weight, helping to break criminal networks and minimize the impact of illicit transactions on affected economies.

The EU adopted the 5th AML Directive in 2018.

The Financial Action Task Force updated Recommendation 15 in that year, to include crypto businesses. European FATF Members and non-European FATF Members demanded that cryptocurrency businesses adhere to AML Standards.

Who Is Affected?

Verify that you’ve met FATF standards by checking the federal AML laws.

Criminals using crypto platforms for money laundering

Here is a list of five popular ways to launder money on the cryptocurrency market.

• Combining services 

Criminals exploit the mixing of services by sending virtual assets through multiple wallets. By combining them again, they make them appear legitimate.

• Unregulated Trading:

Criminals will switch to cryptocurrency in order to conceal their tracks. Platforms with lax AML laws, like peer-to-peer platforms (like Coin Check), use this scheme.

• Platforms for gambling

It is possible to launder money by betting at gambling sites that accept cryptocurrency.

• Criminals use money mules 

people who have clean transaction histories – to launder illicit cryptocurrency. Bitcoin is often used as a  money mule.

• Card Prepaid-

crypto cards prepaid facilitates money laundering as they allow criminals to convert dirty digital assets into fiat currencies.

Even though they may not have intended to, it is still possible.

Learn how to do that.

How do crypto-businesses detect fraud?

If you want your crypto business to be legit and not just a sham, then there are three steps to take:

Know Your Customer (KYC)

1) establishing a business relationship,

2) when an existing customer conducts an occasional transaction 

3) In other circumstances specified by law, crypto businesses must conduct customer verification. Verification typically entails gathering the customer’s name, address, and date of birth. Depending on the jurisdiction there may be other requirements.

Transaction tracking

In an effort to determine the risk of money laundering posed by clients, cryptocurrency businesses should implement a system for monitoring transactions that can detect specific indicators.

Why Choose Surepass?

Surpass developed highly secured APIs to aid in the verification of identity. These APIs allow automated processes and can be integrated into existing systems. Surpass helps improve regulatory reporting, data management and compliance. Our comprehensive verification-as-a-service offerings ensure that you remain in compliance.