How to avoid money laundering through crypto?

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The data that cryptocurrencies are used for money laundering greatly undermines the credibility of virtual assets. Decentralization and the absence of intermediaries undoubtedly attract scammers. But it would help if you understood that this is not a simple procedure and is rare in the virtual world.

Particular measures reduce the number of money laundering procedures. AML checks online help reduce fraud and increase people’s trust in virtual assets.

Why cryptocurrency is used for money laundering

Although virtual assets are a relatively young financial instrument, several high-profile cases have already involved money laundering through crypto. It is because blockchains do not have strict regulations and control over transactions. No one will cancel a suspicious transfer that scammers use. On the other hand, it is a decentralized ledger that stores information about all transactions. Finding information about the movement of funds is factual.

To hide information about money laundering assets are immediately transferred to personal tokens and withdrawn to wallets. Such coins are quite challenging to track, which is what scammers use. Most exchanges do not support using such assets, which complicates the procedure.

There is also the option of exchanging cryptocurrency for money in the physical branches of the cryptocurrency exchange. It is an incomplete version. The fraudster must undergo a detailed check and provide all the documents for such an operation. In addition, such exchanges strictly regulate trading on their platforms.

Measures to prevent money laundering through cryptocurrency

Cryptocurrency platforms useAML technology to avoid money laundering. The most common are:

  • identity verification;
  • transaction verification;
  • user activity control.

KYC is a tool that is used by almost all exchanges. To carry out a transaction with a cryptocurrency, the user needs to pass verification. To do this, you must provide documents that confirm your identity. Many are afraid to do this, as there is a risk of data leakage. But when working with proven services, this is not possible. WhiteBIT reliably protects user data and uses a multi-level protection system. So you don’t have to worry about privacy.

KYT (Know Your Transaction) is another security measure that allows you to block suspicious transactions. Many services use this tool to prevent financial fraud. Platforms also track user activity and the number and size of transactions to avoid money laundering.

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