AML Crypto

Anti-Money Laundering and Cryptocurrency


In 2017, China became one of the first countries to ban cryptocurrency and every cryptocurrency exchange platforms. What was the reason for such action, considered to be harsh by many investors? When talking about the ban, the government did mention its decentralization and volatile nature, which makes it susceptible to frauds and scams.

No wonder many other countries are looking to establish new measures in limiting the use of cryptocurrencies, even though some 35 million people worldwide use blockchain and cryptocurrency.

Although, it does not mean that the cure for fraud and scam does not exist.

What is Anti-Money Laundering (AML)

Money laundering is a worldwide danger. Both Banks and Governments always target new policies and regulations to help them diminish such activities.

“Anti-money laundering” simply means all the regulations and policies put in place to make institutions actively keep an eye on their customers or users to the end of preventing corruption or money-laundering. AML stipulates that such institution turn-in anyone who violates such measures.

“Given that financial institutions play such a pivotal role in the world of financial crime, it is important that they are properly trained on how to identify and handle money laundering”.

AML Procedures/AML Regulations

Just some technical details for you.

In most countries, AML policies require that a detailed record of the transaction is kept for each client. It includes a record of their activities. This record is always digital, and a pre-installed financial ‘firewall’ help raise an alarm over any suspicious activities by any customer. When the financial institution succeeds in detecting a suspicious activity, they immediately report to the appropriate bodies.

Though such policies vary from one region to another, basically almost all AML policies require each financial institution to periodically send a detailed record of financial activities of their ‘top’ clients to the regulatory body. It is part of their transaction monitoring program.

In most European banks for example, when any transaction exceeds 15,000 British Pounds, paperwork (KYC and AML), an ID card, and maybe a social security number is required to make the transaction go through. Without such paperwork, the transaction will not be approved. Even if a transaction is below 15,000 limits, it could still be reported if it looks suspicious in any way.

AML Compliance Officer

Each financial institution is mandated to have someone appointed to serve as the AML Compliance Officer. His/Her task involves monitoring financial activities and making sure that those transactions abide by the agreed current AML policies and regulations.

He/She is directly tasked with making sure that the institution’s AML policies are duly implemented. Compliance officer, therefore, oversees the measures put in place internally to detect suspicious transactions and report them. This person is particularly interested in the records of high customers, which are always prone to such malicious transactions.

AML and Cryptocurrencies

Even though cryptocurrency and its market seem to be booming at the moment, it has been the target of hackers and other financial criminals today. Governments are concerned that online criminal activities could increase in the coming years if no strict measure is put in place to curtail their activities.

An example is the case of Bitcoin. Sometimes after its creation, some traders made use of it within the ‘Dark Web’, an online sphere where illegal activities thrive. As a result, authorities in the U.S and neighboring regions started raising eyebrows.

AML is being tipped to help the cryptocurrency market fix these little gray areas that have been identified. With stricter regulations governing online crypto transactions, a more balanced, and a criminal-free decentralized marketplace will be achieved.

KYC and Cryptocurrencies

Know Your Customer (KYC) is a system of regulations put in place (similar to AML), to keep track of transactions carried out in digital currencies. The way it works is that it establishes the identities of each customer dealing in any kind of cryptocurrency(either buying bitcoin or selling bitcoin).

The purpose of these identity schemes is to prevent those without access from gaining an entry into their cryptocurrency services, thereby preventing criminals and hackers from accessing their accounts.

To sum up

Even though regulations have not been easy to come by in the cryptocurrency market, AML can actually work for the good of mankind. TRASTRA team considers AML and KYC to be the core points for keeping our customers and their funds safe.

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