Although it’s a struggle to keep up with the ever-changing crypto and Anti-Money Laundering (AML) regulations, the good news is that there are certain measures that can be taken to identify and prevent cryptocurrency money laundering, such as: analyzing transactions by implementing automated anti-money laundering (AML) processes.
So where do you start?
It is essential for organizations to understand the best practices for mitigating the risk of crypto-based money laundering:
- Educating yourself on understanding the existence and emergence of different types of money laundering (because it keeps changing - so keep up!)
- Identifying suspicious transactions by monitoring transactions proactively. This needs implementation of automated AML systems, allowing you to set up and manage rules for your specific business context, to reduce unnecessary time spent on investigating false negatives.
- Implementing effective internal controls and policies, and staying up-to-date on regulatory requirements.
Table
Summary of how certain actors are known to use various crypto asset laundering methods.
Note. p.117: https://www.elliptic.co/resources/typologies-report-2022
More concrete steps to ensure that organizations are not involved in illegal activities include the use of blockchain technology and effective KYC/AML compliance software. Blockchain technology makes it effectively impossible to modify data once it has been added to the chain, which of course makes information and transactions almost impossible to fake or misrepresent. In turn this allows organizations who are involved in transactions on the blockchain network to trust that their transactions are legitimate without exposing them to fraud.
The way criminals use the crypto currency landscape keeps changing and AML processes need to keep up. The most important parts of that work consists of integrating and adopting automated processes for onboarding and monitoring transactions, individuals, and businesses.
