Major Banks Process Billions in Crypto Business Unknowingly

News / 16.12.2019

CipherTrace released a press release based on its research on December 16. The claim by the Blockchain intelligence company known as CipherTrace is that large banks could be processing a maximum of 2 billion USD in transfers that are related to cryptos, but not detected, every year.

According to the firm, the ten leading commercial banks in the U.S. have unregistered crypto businesses that use their payments networks in processing funds.

The research states that these unregistered crypto money service businesses (MSBs) are entities like cryptocurrency exchanges.

Some rules in the U.S. require banks’ identification of the MSBs with their networks by law. However, the firm maintained that several of them do not have what it takes for adequate identification of cryptocurrency exchanges as well as other virtual asset service providers (VASPs) as MSBs.

CipherTrace maintains that the revision of BSA and FATF guidance that will become effective for G20 nations soon will make identification and compliance further serious.

Carole House talked about the readiness of banks for the imminent statutory revisions. She said:

“It would be interesting to know how many financial institutions operating in this space are able to identify a [crypto-business] recipient as a financial institution on the basis of its wallet reference number, or other information that it currently has available to it.”

Based on the Anti-Money Laundering (AML) compliance problem this presents for financial institutions, CipherTrace introduced a product known as Crypto Risk Intelligence for the reduction of risks associated with cryptocurrency on their payment rails.

The ongoing efforts of CipherTrace are towards the monitoring of more than 500 crypto businesses, as it compiles risk and compliance scores and generates AML filtering data useable by banks and other entities.

According to the report, the produce assists banks in meeting this challenge by focusing on four aspects. The first is the detection of unknown risks between VASPs and bank payments networks like SWIFT and ACH.

The second aspect is to allow businesses related to cryptos to access the risk scores of CipherTrace. The third one is the identification of unregistered MSBS and peer-to-peer systems relying on bank services. The last aspect is dealing with dark web risks as well as the detection of illegal financial products or laundered funds made possible through crypto transactions.

The argument of CipherTrace in recent times is that the new FATF regulations will re-haul the requirements for the operation of cryptocurrency businesses by telling them to track the transactions of their customers and where they are sending their funds.


Featured image courtesy of Shutterstock. Source: CryptoPress.

A creative writer in the field of content writing for the past 7 years. Iulian is passionate about his work and his interest in areas such as technology, travel, sports, literature and gastronomy have aided him to the research quality in articles that reflect these themes. Recently, he discovered the Bitcoin and the blockchain technology and he’s a big fan now.