Automated due diligence on crypto assets for AML/CTF Compliance
This use case actively utilizes Crystal's Risk Score and Entity Name features.
Crystal provides real-time Risk Score (RS) estimation for owners of crypto-wallets. It is an objective, math-calculated value that indicates an Entity's relation to known 'bad actors' (i.e. darknet marketplaces) VS trusted blockchain participants (i.e. exchange services with proven KYC procedures).
The Crystal database contains more than 20 million wallet addresses owned by more than 30,000 entities.
For automated transaction acceptance procedure:
- Get a source address of the transaction and feed it to Crystal API. As instant response, Crystal provides a RS value for the owner of the address.
- Based on the RS, the funds can be accepted (RS below 25%), sent back to the sender (RS over 70%) automatically, or conveyed for additional investigation with Crystal Pro or Express (see below).
- RS thresholds can be adjusted.
- In case of using Crystal Pro, you can update Crystal's database with the names of entities known only to you – for future reference for better KYC, e.g. for clients black-listing. The added names will be stored in your local Crystal Pro's database only.
If the RS value is around 30% to 60%, it is recommended to conduct an additional investigation.To perform the CTF/AML check on a transaction:
- Feed the transaction's ID to Crystal's Explorer tool to get its list of transactions.
- Use the Visualization tool to see more Input transactions and find the most risky ones. You can pinpoint cryptocurrency owners who initiated risky transactions and find out the nature of the risky entities.
- Use the Tracking tool to find the destination of the funds and check it against the sanctions lists, e.g. the SDN list (CTF check).
For example
A client might have received an unsolicited transaction from an untrusted entity, increasing his own risk value unnecessarily.
Or, a client might have conducted the transaction via several nodes (wallets) to conceal the funds' connection to a suspicious origin (ML-case). In this case, the RS value may be lower than 70%, but it still holds suspicious funds. With Crystal's Visualization and Tracking tools you will be able to see the entire history of all transactions and addresses involved. You can save the Visualization, share it with your colleagues, or export it as an external file for other investigations
Use of Cryptocurrency Analytics in KYC Procedure
Crystal provides new possibilities for your KYC procedures to comply with the regulative requirements, which include consideration of cryptocurrency ownership.
You can extend your KYC procedures with Crystal analytics
- At client onboarding, the client provides his cryptowallet address (CA). Just like a bank account ID, it is public information and contains no personal data in itself.
- Using Crystal, you can get the wallet's RS and detailed information – such as current balance, funds sent/received, date of last activity, etc.
- To verify the ownership of the wallet, you make a very small, test cryptocurrency transaction with the CA and request updated balance from the client. Compare the figures provided by the client and by Crystal – they should be the same and written in the same block.
- If needed, use Crystal Pro or Express to find other cryptowallets of the person, detailed information and transaction history.
- If you are using Crystal Pro, you can add the client's name into the Entity database – for quick references in the future. You'll be able to connect the client with his other new cryptowallets and transactions.
You can use Crystal API for automated cryptocurrency ownership check.
Supported cryptocurrencies
As of April 2019 (v.2.0):
- Bitcoin
- Bitcoin Cash
- Ethereum
As of February 2018 (first release):
