Banks cannot identify …


How does money laundering work? – Delena D. Spann

Banks cannot identify ...

Banks cannot identify 90% of suspicious crypto transactions

  • Banks cannot yet identify cryptocurrency transactions

  • Analytics services create a database of unverified information

  • More money is laundered through banks than through cryptocurrencies

International consortium of news organizations developing transparency standards.

This is the conclusion reached by analysts from the CipherTrace company, which is engaged in blockchain forensics. Studies show that banks do not know how to track and how to respond to suspicious transactions, so they simply turn a blind eye to them.

Banks do not understand the nature of crypto transactions

Banks cannot identify ...

The latest research from CipherTrace shows that most of the banks operating in the world do not understand the nature of cryptocurrency transactions and therefore cannot adequately analyze and block them. The document states that according to generally accepted FinCEN rules, banks are required to monitor the activities of organizations using convertible virtual currency (CVC), if such companies are engaged in:

  • business related to CVC;
  • servicing companies that work in the CVC field;
  • provide services to clients who actively use CVC.

And here is the real problem. If a bank is unable to determine with certainty whether its institution is serving a virtual asset business or if its customers make payments related to virtual assets, they are unable to meet their BSA obligations.

To identify the accounts of potential CVC users, financial institutions have created their own database, which is formed on the basis of information collected by analytical services. These tools collect information about the accounts from which the transactions were sent and the accounts of the recipients. A CipherTrace study found that this approach results in a lot of false positives and missed large, large cash flows that cannot be detected by proper name matching. In some cases, this approach missed 90% of real cryptocurrency transactions at a financial institution..

“This is obvious when you look at an exchange like Gemini, which is associated not only with the famous exchange created by the Winkelvoss twins, but also with other companies of the same name, from Gemini High School in Maine to Gemini,“ an elite manufacturer of wood flooring for interior and exterior works. Gemini is a company “with over 40 years of experience in the construction business” and many other companies. You can quickly see how name matching alone can lead to a huge number of false positives, wasted time and effort, ”- stated in the article.

Banks cannot identify ...

In fact, CipherTrace research has shown that a typical name-based system can completely skip up to 70% or more of crypto exchanges and up to 90% of actual transaction volume..

Banks remain the main platform for money laundering

While crypto opponents oppose cryptocurrencies and claim that it is CVC that is used for money laundering, analysts point out that it is banks that are the main platform for corrupt officials and criminals..

The research unit of the Mexican Ministry of Finance has concluded that the banks that are part of the so-called G7 are most often used for money laundering. This is reported by the publication El Economista. In particular, the G7 includes banks such as BBVA, Santander, Citibanamex, Banorte, HSBC, Scotiabank and Inbursa. It is these organizations that are at risk of possible money laundering. At the same time, companies working with cryptocurrencies are used to illegally receive money much less often..

“Based on the methodology applied, the multiple bank (G7), made up of the seven largest banks in Mexico, is the sector most likely to be used for money laundering operations,” said head of financial intelligence, Santiago Nieto Castillo..

The risk group also included such organizations as brokerage houses, exchange offices, as well as several commercial banks. These structures account for about 80% of money laundering cases..


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