Money laundering is a serious concern for both fiat and cryptocurrency transactions. Regulations and crime prevention concepts have been put in place under the umbrella of Anti-Money Laundering (AML) to prevent financial crimes. Though rules may differ from country to country, their ultimate goal is to combat risks such as tax evasion, trading illegal goods, and financing terrorism. This article will explain how cryptocurrency anti-money laundering rules work and why complying with them is crucial.
Why Many Call Crypto Unsafe
It has become more and more attractive for money launderers to use digital currencies as a means of funneling illicit funds. Cryptos are so vulnerable to bad actors’ use because of the cheap and anonymous transactions. In some cases, they can easily achieve this without leaving any trace. In addition, some coin providers offer anonymous functionality, which can appeal to people with bad intentions. It is another reason why crypto assets are often used to hide the origin of funds.
AML Regulations in Crypto
AML in crypto involves applying anti-money laundering measures to prevent and detect illegal financial activities within cryptocurrency transactions. Regulated crypto exchanges must comply with AML rules to protect users from unlawful financial schemes. To avoid being involved in financial crimes or associated with money laundering, users can check funds or wallet addresses on their own. For example, AML check crypto on WhiteBIT allows users to enter a wallet address and check if it was involved in money laundering or financing terrorism. This way, users can ensure the money they receive is “clean.”
Who is behind AML policies? Financial Action Task Force (FATF) is a global organization combating money laundering and terrorist financing. It published cryptocurrency AML guidance that all VASPs (virtual asset services providers) must comply with. VASPs include crypto exchanges, digital asset issuers, and other establishments that deal with cryptocurrencies.
AML Detection in Cryptocurrencies
To detect money laundering, crypto exchanges implement the following initiatives:
Cryptocurrency anti-money laundering is a set of regulations to detect and stop bad market actors from implementing their criminal financial plans. Adhering to AML rules is necessary for crypto exchanges and other VASPs to maintain a reliable reputation in the crypto industry.
