{"id":157127,"date":"2021-01-18T16:19:00","date_gmt":"2021-01-18T13:19:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto\/"},"modified":"2021-01-18T16:19:00","modified_gmt":"2021-01-18T13:19:00","slug":"how-compliance-software-detects-fraud-and-money-laundering-involving-crypto","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto\/","title":{"rendered":"# How compliance software detects fraud and money laundering involving crypto"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a37a5b61b400\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a37a5b61b400\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto\/#Achieving_compliance\" >Achieving compliance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto\/#Taking_action\" >Taking action<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># How compliance software detects fraud and money laundering involving crypto <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crystalblockchain.com\/\"><img loading=\"lazy\" decoding=\"async\" width=\"1480\" height=\"200\" alt=\"\" src=\"https:\/\/s3.cointelegraph.com\/storage\/uploads\/view\/4080512ee8653aaf756729e322a86ed5.jpg\"><\/a><\/p>\n<p dir=\"ltr\">The crypto industry has boomed over the past 12 months. While 2019 began with a total market cap of $200 billion, the explosion in Bitcoin\u2019s value resulted in this figure surging fivefold as 2020 began \u2014 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/charts\/\">and according to CoinMarketCap,<\/a> the digital assets space was collectively worth $1 trillion at one point.<\/p>\n<p dir=\"ltr\">However, as the crypto sector continues to grow and flourish, so too does crypto-related crime. Virtual assets worth $3.8 billion were lost to fraud in 2019. This figure <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crystalblockchain.com\/security-breaches-and-fraud-involving-crypto\">rose to almost $4.9 billion<\/a> in 2020.<\/p>\n<p dir=\"ltr\">Fraud, money laundering and the financing of terrorism are not issues that are exclusive to the cryptocurrency sector \u2014 and every financial system on Earth has had to take action to ensure its infrastructure isn\u2019t used for illicit purposes. But now, regulators around the world are stepping up their efforts to clamp down on criminal activity \u2014 and this has the potential to affect operations for crypto service providers, many of whom are still behind the curve.<\/p>\n<p dir=\"ltr\">Mainstream <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> coverage of digital assets has increased dramatically in recent months, with countless column inches devoted to BTC\u2019s current bull run. This increased exposure also results in newfound scrutiny, especially when exchanges fall victim to high-profile hacks. Thankfully, there are ways for crypto businesses to take action, to protect their operations, and to work in the interests of their consumers in the process.<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Achieving_compliance\"><\/span>Achieving compliance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">Amid the fractured landscape of regulatory developments for crypto, one of the most important sets of guidelines has come from the Financial Action Task Force, which has 39 members including the European Commission, Japan, the United Kingdom, and the United States.<\/p>\n<p dir=\"ltr\">The FATF recently unveiled a <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">series<\/a> of red flag indicators that suggest potentially suspicious activity is taking place \u2014 or possible attempts by entities to evade law enforcement. For example, the size and frequency of transactions could set off alarm bells for compliance officers, especially if such repeated payments are made that fall just underneath the threshold for reporting.<\/p>\n<p dir=\"ltr\">Other issues may arise where deposits are made using bank accounts that use a different name to the one registered with a crypto exchange, where mixers and tumblers are used to obfuscate the origins of BTC payments, or where potentially suspicious IP addresses are used.<\/p>\n<p dir=\"ltr\">At first, it might seem like a nightmare for virtual asset service providers to introduce safeguards that quickly detect when these red flag indicators emerge. In a competitive marketplace, some will be concerned about the costs associated with stopping high-risk transactions in their tracks \u2014 as well as the disruption that their operations could face if legitimate activity is mistaken for something more sinister.<\/p>\n<p dir=\"ltr\">But platforms do exist that can monitor new transactions in real time \u2014 instantaneously assigning a risk score to each and every transaction. This is by no means a straightforward task, as the high volume of transactions running through blockchains daily means that analysis needs to take place continuously and without interruption.<\/p>\n<p dir=\"ltr\">The speed with which bad actors can execute transactions also means that compliance systems need to be fast acting \u2014 identifying centers of suspicious activity, and creating meaningful connections to other wallets where potentially illegally acquired funds are distributed. Past data may also be used to anticipate future events, meaning that exchanges can receive a warning that potentially risky activity is about to h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>en \u2014 even if a transaction hasn\u2019t been confirmed yet.<\/p>\n<p dir=\"ltr\">The benefits associated with this type of software aren\u2019t hypothetical. In late September, KuCoin announced that close to $280 million was stolen from its exchange as a result of a security breach. Analytics tools enabled the company to track down and freeze these funds so they couldn\u2019t be laundered further \u2014 and 84% of the assets taken were later recovered.<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Taking_action\"><\/span>Taking action<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">The technical nature of blockchain \u2014 along with the prevalence of crypto scams \u2014 has caused a significant image problem for Bitcoin in society. But despite missteps in the first decade of its existence, aspects of blockchain design champion transparency and security \u2014 meaning it can offer far greater levels of protection than older financial systems. If $500,000 in banknotes are stolen from a bank vault, the funds could end up being far harder to track down than if the same amount was taken in BTC from an exchange that has safeguards in place.<\/p>\n<p dir=\"ltr\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crystalblockchain.com\/\">Crystal Blockchain<\/a> says its analytics platform enables compliance officers and anti-fraud departments to stop illicit activity in its tracks \u2014 and monitoring can either be performed manually or automatically as settings are configurable by the user.<\/p>\n<p dir=\"ltr\">This is achieved by understanding the provenance of funds being sent over the blockchain, their connections, their flow paths, and by alerting crypto service providers if these assets are stolen or fraudulent. Addresses and bank cards can be linked to fraud, extortion, ransomware and darknet marketplaces. Businesses can also be alerted when entities are attempting to deposit to or withdraw funds from accounts and exchanges that have little or no due diligence procedures in place.<\/p>\n<p dir=\"ltr\">Institutional adoption of cryptocurrencies is happening at a staggering rate \u2014 and as we head into 2021 and beyond, Wall Street is ramping up efforts to ensure it has the infrastructure required for traders to gain exposure to digital assets. But this comes with an expectation of a mature marketplace, meaning crypto service providers need to take the necessary actions to ensure they aren\u2019t operating in the Wild West any more.<\/p>\n<p dir=\"ltr\">Marina Khaustova, the CEO of Crystal Blockchain, told Cointelegraph: \u201cThe crypto industry is relatively young, and as the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> develops it also brings with it unique compliance requirements. We need to combine the best practices of the more mature financial industries with the knowledge amassed by crypto market experts to combat money laundering and the financing of terrorism. By assisting with fraud identification and suspicious activity monitoring on the blockchain, Crystal aims to improve safety and trust in the global financial markets.\u201d<\/p>\n<div style=\"background-color: #f0f0f0; padding: 8px 21px; font-weight: bold; color:#253137;\">Learn more about <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crystalblockchain.com\/\" style=\"color: #253137\">Crystal\u00a0Blockchain<\/a><\/div>\n<div id=\"post-content\">\n<p><span style=\"font-size: 12px; color: rgb(169, 169, 169);\"><span style=\"font-weight: 600\">Disclaimer.<\/span> Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice. <\/span><\/p>\n<\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# How compliance software detects fraud and money laundering involving crypto &#8221; The crypto industry has boomed over the past 12 months. While 2019 began with a total market cap of $200 billion, the explosion in Bitcoin\u2019s value resulted in this figure surging fivefold as 2020 began \u2014 and according to CoinMarketCap, the digital assets&#8230;<\/p>\n","protected":false},"author":1,"featured_media":157128,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS9zdG9yYWdlL3VwbG9hZHMvdmlldy8yNTUyYjMwZGVhYjg1NDk4YzE0NGM5NmQ3YzJkMTY1MS5qcGc=.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74859,74862,74894,74863,75141,71006,70934],"class_list":["post-157127","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-aml","tag-bitcoin","tag-blockchain","tag-cryptocurrencies","tag-kyc","tag-fraud","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/157127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=157127"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/157127\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/157128"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=157127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=157127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=157127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}