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Banks cannot identify up to 90% of suspicious cryptocurrency transactions

September 10, 2020

Financial institutions around the world have reported 134,500 suspicious virtual currency transactions over the past two yearsHowever, this is only the tip of the iceberg, according to a report by the Blockchain Forensic Company. CipherTrace.

The report states that the Financial Crime Control Network (FinCEN) sees a significant increase in suspicious transaction reports of the institutions since the publication of their Advice on illegal activities with convertible virtual currency (CVC)in May 2019.

Despite this, CipherTrace claims that many financial institutions have developed inadequate “home” systems to identify accounts and transactions related to cryptocurrencies.who simply use lists of cryptocurrency names and Virtual Asset Service Providers (VASP) to signal partnerships for the transfer of cryptocurrencies.

Banks cannot identify up to 90% of suspicious cryptocurrency transactionsBanks cannot identify up to 90% of suspicious cryptocurrency transactions

This strategy “creates a lot of false positives and overlooks significant and large cash flows that cannot be detected by assigning internal names:”

“A typical name-based system can lose up to 70% or more of cryptocurrency exchanges and up to 90% of actual transaction volume entirely.”

According to the report, few financial institutions are targeting exchanges outside of the top 100. Many cryptocurrencies are also listed under a trade name that is different from their brand, highlighting other shortcomings in using name matching to signal crypto transactions.

CipherTrace recommends banks use a surveillance system that attempts to keep track of accounts associated with P2P exchanges and smaller virtual money terminals.and cross-referencing small VASP contact information with customer records to locate suspicious activity.

The CipherTrace report is displayed immediately afterwards The United States Internal Revenue Service (IRS) will sign a contract for $ 249,900 with Blockchain Analytics and Tax Software Expansion of the functions for tracking cryptocurrencies.

In late August, the blockchain company said it had developed a tool for the US Department of Homeland Security that can do this Track transactions in Monero’s data protection currency (XMR).

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