Zaftr Teams up with CipherTrace to Enhance Crypto Compliance

The deal allows Zaftr to enhance AML processes like tracing the source of on-chain funds and matching user IDs.

Canadian cryptocurrency firm Zaftr has partnered with blockchain security and analytics provider CipherTrace as the company is embarking on a multi-pronged push to boost compliance procedures across its platform.

The deal with CipherTrace, which is backed by venture firms such as Mike Novogratz’s Galaxy Digital, allows Zaftr 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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Zaftr is a digital asset service provider and direct buyer and seller of digital assets based in Canada. The company provides solutions for investment funds, investment advisors, family offices, and high net worth individuals to buy and sell digital assets. It claims to have facilitated more than $10 billion in corporate and financial transactions.

“The CipherTrace offering provides us with quality information to be able to assess risk associated with digital asset wallets and allows us the flexibility to establish our own blockchain analysis processes on top of data. Through the CipherTrace solution, we can identify questionable or verifiably criminal activity and act accordingly to ensure the security of ourselves, our suppliers, and our customers,” said Nathan Montgomery, the President & CEO of Zaftr.

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Cryptocurrencies throw up challenges to regulators

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.

In December, the company disclosed a slew of financial institutions have not deployed the right KYC/AML infrastructure to detect unregistered cryptocurrency transfers.

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 violations of securities and AML rules.

“Zaftr’s clients, among other major financial players, should feel confident in the legality of peer-to-peer trades within the trusted digital asset class. We’ve structured our monitoring services to provide that assurance to companies like Zaftr,” added Dave Jevans, CEO and a founder of CipherTrace.

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