Cryptocurrency Exchanges & Wallets
Cryptocurrency Money Laundering
Money laundering is a crime that has been around for hundreds of years; however, as technology has advanced, the prevalence of money laundering has grown as well. Criminals are able to expertly use new technology to launder huge sums of money in the blink of an eye. This exchange of dirty money has only grown with the rise of cryptocurrency, such as bitcoin.
As one of the leaders in global risk compliance. Truth Technologies knows how to protect businesses and other entities from money laundering that takes place using cryptocurrency. Read below to learn more about how money laundering happens using cryptocurrency, the rules and regulations surrounding cryptocurrency, and how we can protect you from this threat.
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What is Money Laundering?
Money laundering is a process by which an individual or entity tries to conceal or mask dirty money as clean money. This process unfurls in several steps that are used to “clean” money by funneling “dirty” money through a series of legitimate accounts and businesses. The dirty money then blends in with the clean money, making it hard to tell the two apart. With the rise of cryptocurrency, this problem has only become even more prevalent.
Money Laundering Process With Cryptocurrency?
Traditionally, money laundering is a crime that has been carried out mainly through cash; however, money laundering is now taking place with cryptocurrencies. Some of the ways that this happens include:
- Tumblers: Tumblers are bitcoin mixers that are used to clean dirty cryptocurrency. These tumblers are used to bounce cryptocurrency through various addresses where the full amount is cleaned and drawn back together into a single bitcoin wallet.
- The Dark Web: Much of the money laundering activity takes place on an entity called the dark web. Many of the laundering servers are hosted there and the general public has no way of accessing using a traditional web browser. This is a true hub for illegal activity as the transactions are extremely hard to identify and track.
- Lack of Regulations: Even when cryptocurrency transactions take place on the regular internet, there are few regulations globally. Many of the exchanges utilized by the general public are unregulated and not requiring additional security measures that take advantage of “know your customer” [KYC] and “anti-money laundering” [AML]) procedures. This makes cryptocurrency particularly hard to track.
Each time cryptocurrency is exchanged, there is another degree or layer of privacy added as it hops to a new wallet or address. This makes money laundering nearly effortless in the world of cryptocurrency.
Rules and Regulations for Cryptocurrency: Anti-Money Laundering
The United States has ruled that cryptocurrencies are treated as any other financial entity and are subject to the Bank Secrecy Act (BSA) and all of its rules and regulations. Some of the regulations that fall under the purview of this act include:
- Currency Transaction Reports: A currency transaction report (CTR) must be issued for any cash transaction that exceeds $10,000 in one business day. This report needs to include the bank account number, name, address, and social security number.
- Suspicious Activity Report: A suspicious activity report (SAR) needs to be filed for any transaction where the customer appears to be making an attempt to avoid reporting requirements.
- Monetary Instrument Log: A monetary instrument log (MIL) must be used to indicate purchases of any monetary instruments valued between $3,000 and $10,000.
Given the prevalence of money laundering through cryptocurrency, it is important for everyone to watch transactions that take place using this financial instrument closely.
Red Flags for Money Laundering in Cryptocurrency
There are a few red flags in the world of cryptocurrency that everyone should watch for. Some of the biggest examples include:
- Velocity: A high rate of cryptocurrency transactions are executed in a short amount of time
- Volume: A large number of transactions are made spread out over a few days in an apparent effort to avoid detection
- Information: Trades are taking place with a lack of information (where a customer won’t provide his or her identity or participate in a KYC interview)
- Behavior: If a customer is behaving in a manner that is inconsistent with his or her prior transactions, this is a red flag that money laundering might be taking place
Improved Anti-Money Laundering (AML) Screening with Truth Technologies, Inc. (TTI)
When it comes to cryptocurrency, it is critical for all organizations to guard themselves against money laundering. Truth Technologies has established itself as one of the premier leaders when it comes to anti-money laundering detection, screening, and prevention. TTI specializes in anti-fraud, AML, customer identification, and compliance. With a team of professionals from information technology and finance backgrounds, TTI is in a unique position to protect organizations against money laundering in all forms. A few of the benefits of using the tools offered by TTI include:
- Improved Compliance: Your organization will be able to comply with all rules and regulations including EU, Canadian, US laws. You can configure accounts and conduct comprehensive audit logs for reporting and due diligence purposes.
- User-Friendly: Using batch screening, CTR and SAR reporting, and real-time APIs, you can review countless customers without using manual data entry.
- Integration and Maintenance: Our technology will ensure you stay up to date automatically. We will protect your systems, software, and databases from ever falling behind or becoming vulnerable.
- International Operations: Our tools are offered in multiple languages including English, Spanish, and French. We also have a global watch list complete with names and addressed.
Realize Improved Security with Truth Technologies Today
If you would like to learn more about cryptocurrency and how to prevent money laundering, contact us today. At TTI, we offer a free tool demos so you can discover our superior AML screening and due diligence for yourself. Discover why Truth Technologies is one of the leaders in anti-money laundering tools and protection. Our software will help you protect your organizations from the threat of money laundering. Gain improved control over your business operations with TTI today.
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