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By Meet Deltan
Every new business endeavor brings many opportunities and challenges to financial institutions and regulatory bodies. Even though cryptocurrency offers greater financial inclusion, its threat in combating economic crimes such as money laundering and terror financing is also worsening. Reports from one of the leading blockchain companies state that In just 2021, criminals laundered more than 8.6 billion dollars driven solely by cryptocurrency. The figures were 30% higher than the previous year's money laundering figures.
Another report claims cybercriminals have laundered nearly 33 billion dollars in cryptocurrency since 2021. The mountainous amount used for criminalsâ objectives needs to be detected, prevented from being laundered, and moved to cybercrimes.
This is where the AML compliance program plays its role in combating money laundering. AML Crypto is an essential monitoring protocol that helps businesses detect the early signs of money laundering and prevent it by reporting it to the relevant departments. By implementing the AML regulations, the cryptocurrency agency can add extra credibility to the broader adoption methodologies.Â
What do AML Regulations say?
Anti Money Laundering regulations oblige all financial institutions, including the cryptocurrency industry, to set up measures to detect and prevent money laundering activities. Companies can establish their rules but must adhere to the AML compliance programs. The must-have crypto AML compliance programs that crypto businesses need to follow are customer due diligence, suspicious activity reporting, risk assessment, and customersâ screening against multiple global watchlists.
Why is Cryptocurrency more prone to Money laundering? Â
Numerous reasons make the cryptocurrency market an easy way to launder money. We highlight the one where the crypto market allows users to stay anonymous and move money across the border quickly and without any compliance restrictions. Another factor that makes it more prone to money laundering is the need for stricter rules and regulations in different jurisdictions. Above all, the decentralized nature of cryptocurrency is more complicated, especially when regulatory bodies try to trace the transactions. Â
Essential steps in Achieving Crypto Compliance program
The cryptocurrency market is more complex than the traditional financial market. Therefore, a vital sector approach is needed to comply with the regulatory compliance program. The key aspects and tactics cryptocurrency loafers effectively help you compare to programs for your crypto business.
- Stay updated with the Latest AML Rules and Regulations.
Cryptocurrency keeps changing its process at quite a fast pace, and thatâs why regulatory bodies also have to come up with the latest approach to combat money laundering crimes in the digital currency industry. Every organization's compliance team must stay updated with the latest regulations. Failing to do so can result in a hefty fine or business sanctions, which ultimately damage your business reputation.
- Implement AML screening tools within your organization.
Ensure you are following the essential customer verification and identification regulations, including comprehensive customer due diligence and screening against politically exposed persons, global watchlist, Sanctions list, and adverse media screening. Your business needs to detect suspicious activities as they happen and then report them to the relevant department for action against the culprit.
- Conduct Risk-Based Approach
Another way businesses can easily detect criminal activities is through a comprehensive risk assessment of their customers. This assessment identifies the risk and threat the individual can pose to money laundering and terror financing. Donât forget to update your assessment approach regularly.
- Embrace advance Technology
Integrating your business operational process with the advanced AI tool can make your AML crypto check and compliance program relatively smooth and reliable in detecting and preventing financial crimes.Â
What steps are needed to take to achieve Crypto AML regulations
The steps that every business needs to follow to navigate the money laundering difficulties successfully comply with the AML regulations.
- Every jurisdiction has its risk level, so businesses need to assess the risk level the industry and individual can pose in a specific jurisdiction.  Â
- Define your custom red flags and set the compliance program based on such red flags.
- Make sure you have implemented the risk-based approach assessment of your customers.
- Implement comprehensive screening against the thousands of sanctions list.Â
Whatâs the Way forward?Â
Addressing the challenges discussed above is of the utmost importance for every business and organization. To empower themselves, crypto businesses need to integrate themselves with third parties that provide monitoring and screening tools to combat money laundering.Â
Author Bio
I'm a passionate content writer specializing in âtechnologyâ which includes, artificial intelligence, machine learning, business, finance, cyber security, AML crypto, fintech, and data science.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.