Blockchain security and analytics provider CipherTrace has rolled out a new product to help banks and financial institutions fill the ‘blind spot’ in crypto compliance.
Dubbed Armada, the new tool plugs into banks’ existing transaction monitoring system to trace payments associated with money laundering.
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The tool analyses Know-Your-Customer (KYC) processes to inspect and flag payments to risky virtual asset service providers (VASPs) and unregistered money service businesses (MSBs).
It uses machine learning algorithms to link bank routing and account numbers to VASPs to find such illicit payments to and from crypto exchanges, Bitcoin ATMs, crypto users and others, the company claims.
The Silicon Valley-based firm claims that banks in the US process $2bn in cryptocurrency funds each year and eight out of 10 do so unknowingly, leaving them vulnerable to fraud.
Moreover, the company also claims that 55% of the top 500 cryptocurrency providers have weak KYCs.
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By GlobalDataIn its press release, the company noted: “The lack of visibility and preparedness on the part of banks and other financial institutions makes them vulnerable to fraud and compliance exposure.
“The consequences for failing to achieve compliance, whether knowingly or unknowingly, include fines, reorganization, and even jail time.”
The crypto investigations firm has been initially funded by DARPA and the US Department of Homeland Security.
The company’s database contains more than 500 businesses involved in virtual asset transactions and currently, it provides blockchain analysis tools to over 130 clients.
