Which AML checks are most commonly used by cryptocurrency exchanges?

6 answers

• Mar 15, 2022 · 3 years ago
  Cryptocurrency exchanges commonly implement Know Your Customer (KYC) procedures as part of their AML checks. KYC involves verifying the identity of users by requesting personal information such as government-issued identification, proof of address, and sometimes even a selfie or video verification. This helps exchanges to ensure that they are dealing with legitimate individuals and not facilitating money laundering activities.
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• Mar 15, 2022 · 3 years ago
  Another commonly used AML check is transaction monitoring. Cryptocurrency exchanges employ sophisticated software that analyzes transaction patterns and flags any suspicious activity. This includes monitoring for large transactions, multiple small transactions, transactions to or from high-risk jurisdictions, and other suspicious patterns. By monitoring transactions, exchanges can identify and report any potentially illicit activity to the relevant authorities.
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• Mar 15, 2022 · 3 years ago
  At BYDFi, we take AML compliance seriously. In addition to KYC and transaction monitoring, we also conduct enhanced due diligence (EDD) checks on high-risk customers. EDD involves conducting more thorough investigations into the source of funds and the intended purpose of transactions. This helps us to better understand the nature of the customer's activities and identify any potential risks.
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• Mar 15, 2022 · 3 years ago
  Some cryptocurrency exchanges also collaborate with third-party AML service providers. These providers offer specialized tools and databases that help exchanges to screen customers against global sanctions lists, politically exposed persons (PEPs) databases, and other risk indicators. By leveraging these external resources, exchanges can enhance their AML checks and ensure compliance with international regulations.
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• Mar 15, 2022 · 3 years ago
  In addition to these measures, some exchanges also employ manual reviews and risk-based assessments. This involves assigning risk scores to customers based on various factors such as transaction history, geographical location, and other risk indicators. Customers with higher risk scores may be subject to additional scrutiny and monitoring.
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• Mar 15, 2022 · 3 years ago
  Overall, cryptocurrency exchanges employ a combination of KYC procedures, transaction monitoring, enhanced due diligence, collaboration with third-party service providers, and risk-based assessments to implement effective AML checks and ensure compliance with regulations.
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