CipherTrace Unveils Compliance Tool for Banks Involved in Crypto

Ciphertrace’s recent research revealed that US banks unknowingly process $2 billion in crypto transactions that go undetected.

Blockchain security and analytics provider CipherTrace has launched a new cyrpo compliance product called ‘Armada,’ which is addressed to banks and financial institutions dealing with cryptocurrencies.

The Ciphertrace’s newest product follows the firm’s latest research which revealed that major US banks unknowingly process every year roughly $2 billion in crypto transactions that go undetected. The firm claims that these funds stem from money service businesses that deal with cryptocurrencies like exchanges and brokerage services.

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As such, Armada targets a slew of financial institutions that have not deployed the right KYC/AML infrastructure to detect unregistered cryptocurrency transfers. It helps them meet their AML obligations by providing visibility into risky cryptocurrency blind spots so enables their KYC processes to detect and perform due diligence on virtual asset service providers (VASPs).

“If Kunal Kalra’s banks had been using Armada to monitor their accounts, we could have identified Kalra much earlier,” said CEO of CipherTrace Dave Jevans.

CipherTrace, which is backed by venture firms such as Mike Novogratz’s Galaxy Digital, also works with a bank’s existing monitoring tools to enhance anti-money laundering (AML) processes like tracing the source of on-chain funds and matching user IDs to problematic wallet addresses.

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Armada also reveals to banks and financial institutions counterparty risk associated with hundreds of VASPs and unregistered MSBs.

CipherTrace offers blockchain forensics tools

“Similarly, if M.Y. Safra Bank had deployed Armada to detect illegal cryptocurrency transactions, they would not be scrambling to meet the OCC’s requests. Though the OCC did not levy a fine, M.Y Safra Bank must implement an independent BSA audit, monitor and report suspicious activity, institute an independent party to review past activities, and hire a BSA officer and sufficient supporting staff— all within 180 days,” added Jevans.

CipherTrace offers a suite of blockchain forensics tools and services that allow its customers to analyze cryptocurrency transaction flows, such as identifying hacked or laundered funds and also offers theft asset recovery service. The California-based firm also helps law enforcement and financial regulators in their investigations on crypto-related AML and compliance issues.

The cross-border and stateless nature of cryptocurrencies throws up different challenges to regulators, even if they decide to devise formal guidelines to govern the asset class. As such, digital assets operators, including crypto exchanges, are increasingly turning to compliance solutions to help provide background checks on their customers as they find themselves under increasing scrutiny from regulators over possible violation of securities and AML rules.

 

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