Learning from the Past for a Lucrative Future

How Cryptocurrency Companies Can Leverage Lessons from Traditional Finance

January 30, 2023 by Verafin

The landscape of financial crime is evolving – both for traditional financial institutions and crypto companies. As financial institutions advance anti-financial crime programs to maintain regulatory compliance and combat fraud, there are valuable lessons that crypto companies can use to their advantage.

Drawing on lessons from traditional finance, crypto companies should consider how technology, including automated anti-financial crime management platforms, can help your company stay a step ahead of regulatory change and financial crime.

The Challenges of Crypto Compliance: A Rapidly Evolving Landscape

The AML Act of 2020, which encourages “technological innovation and the adoption of new technology by financial institutions to more effectively counter money laundering and the financing of terrorism,” may be the most significant piece of AML/CFT reform in decades. As with financial institutions, crypto companies aligning anti-financial crime programs to the subsequent 2021 AML/CFT National Priorities and the 2022 National Risk Assessments should consider innovative anti-financial crime management solutions that support risk-based AML programs, streamline reporting of potentially suspicious activity, including virtual currency transactions, and empower investigators to provide actionable intelligence to law enforcement.

Both traditional financial institutions and crypto companies must remain compliant with AML/CFT regulations. The most important lesson for crypto companies to take from traditional financial institutions is simple – compliance is constantly evolving, and without an effective compliance program, your company may face financial penalties and reputational risk.

There are real-world consequences for failure to implement proper compliance programs. Recently, a major company had to pay a $50M fine for failure to complete proper customer screening, as well as an additional $50M over the next two years to bolster compliance programs. Staying ahead of regulatory requirements is crucial and both financial institutions and crypto companies should consider innovative anti-financial crime solutions for AML/CFT compliance.

Fighting Fraud in New Spaces: The Rise of Crypto-Related Fraud

Crypto criminals are constantly evolving their methods to defraud their victims. Consumers adoption of digital channels has required financial institutions to embrace a cross-channel approach to fraud detection that removes the traditionally siloed approach within fraud departments, allowing for increased efficiency, saving time and resources during investigations.

Criminals exploiting cryptocurrency have seen significant success in their efforts – according to a sobering new report by the Federal Trade Commission, since the start of 2021, more than 46,000 people have collectively reported more than $1 billion in losses to crypto-related fraud scams. Crypto companies should consider a holistic view of customer activity, leveraging behavior-based analytics, and a complete view of both fiat and blockchain activity to ensure they are protecting their company and customers from evolving fraud schemes.

Focus on Automation: Moving Away from Manual Solutions

As workload and compliance costs increase, and false positives overwhelm already strained resources, there is significant risk in relying on manual processes or rules-based monitoring systems. When facing growing pressure from sophisticated fraud schemes, complex money laundering scenarios, and mounting regulatory requirements, crypto companies should consider how transitioning from manual to automated solutions can help effectively and efficiently fight financial crime and maintain compliance.

For more effective anti-financial crime programs, crypto companies should consider an anti-financial crime solution that includes suspicious activity monitoring both on and off the blockchain, automated regulatory reporting, streamlined case management, and behavior-based risk management.

The Need for Holistic Solutions: The World’s Only All-in-One Platform for Crypto Companies

Verafin’s Anti-Financial Crime Platform for Crypto Companies offers the world’s only all-in-one solution including transaction monitoring, case management and regulatory reporting. With 20 years of experience, Verafin has in-depth experience assisting financial entities to adapt and evolve to meet new or changing compliance obligations.

Our complete solution encompassing blockchain and fiat transaction monitoring, as well as behavior-based analytics, can protect your crypto company and your customers from potentially suspicious activity, as well as reputational and compliance risks. Verafin offers integrated case management to facilitate complex investigations that cross fiat and crypto transactions, and streamlines reporting with automated SAR/STR completion and e-filing.

Stay one step ahead of changing sanctions compliance regulations:

Infographic: Sanctions Screening Compliance Challenges and Solutions for Crypto Companies

Learn more about how Verafin streamlines AML compliance and fraud detection for crypto companies.

Crypto Site: The World’s Only All-In-One Anti-Financial Crime Platform for Crypto Companies

With the world’s only all-in-one Anti-Financial Crime platform for Crypto Companies, Verafin provides a full fiat-to-blockchain view of cryptocurrency activity to monitor and investigate both on-chain and off-chain risk. Verafin's holistic solution offers the investigation tools, case management and regulatory reporting capabilities critical to increasing the efficiency and effectiveness of crypto compliance programs.

Verafin, a Nasdaq company, is the industry leader in Financial Crime Management providing a cloud-based platform for AML, Fraud Detection and investigative Case Management. An all-in-one crypto compliance offering, Verafin supports complex investigations, enables robust transaction monitoring and improves efficiency of compliance processes. Its multi-chain visual investigation tools help streamline case investigations and trace the flow of funds across both cryptocurrency and fiat networks.

Share This...