If Kunal Kalra's banks had been using Armada to monitor their accounts, we could have identified Kalra much earlier. Similarly, if M.Y. Safra Bank had deployed Armada to detect illegal cryptocurrency transactions, they would not be scrambling to meet the OCC's requests.
MENLO PARK, Calif. (PRWEB) April 28, 2020
CipherTrace launches Armada to support banks and financial institutions in achieving AML compliance by providing critical visibility into risky cryptocurrency blind spots so know your customer (KYC) processes can detect and perform due diligence on virtual asset service providers (VASPs). It also works with a bank's existing monitoring tools to identify transactions with VASPs, including those with weak KYC or operating as unregistered money service businesses (MSBs).
Cryptocurrency is pervasive in top US banks:
- A top US bank will typically process upwards of $2 billion in crypto-related transactions annually that are not being detected.
- 10 out of 10 top US retail banks have consumers or small businesses transacting with cryptocurrency converters.
- 8 out of 10 top US banks unknowingly harbor unregistered crypto MSBs.
- 55% of top 500 cryptocurrency providers lack good KYC.
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.
Recent statements by FinCEN personnel and Treasury Secretary Steven Mnuchin showcase the US government's stance on compliance expectations for financial institutions when it comes to cryptocurrency transactions.
FinCEN Director Kenneth Blanco said on December 10th, 2019, “I think it is important for all financial institutions to ask themselves whether they are reporting such suspicious activity. If the answer is no, they need to reevaluate whether their institutions are exposed to cryptocurrency.”
US Treasury Secretary Steven Mnuchin said on March 2nd 2020, "Treasury is focused on preventing the misuse of virtual currencies by money launderers, terrorist financiers, and other bad actors. The United States will continue to be at the forefront of regulating entities that provide cryptocurrency, and will not tolerate the use of cryptocurrencies in support of illicit activities.”
FinCEN’s Carol House said on November 5th 2019, “Compliance with travel rule requires a financial institution to know when their counterparty is a financial institution. It would be interesting to know how many financial institutions operating in this space are able to identify a recipient as a financial institution on the basis of its wallet reference number, or the other information that it currently has available to it.”
Major recent relevant cryptocurrency crimes and enforcement actions include:
- California bitcoin ATM operator Kunal Kalra pleaded guilty to laundering twenty-five million in dirty cash and cryptocurrency through multiple bank accounts.
- Office of the Comptroller of the Currency (OCC) punished M.Y. Safra Bank for lack of AML controls for cryptocurrency related customers. For more information see https://ciphertrace.com/occ-hits-new-york-based-bank-with-first-ever-enforcement-action-for-lack-of-crypto-aml-compliance/
- Mark Harmon of Akron Ohio was indicted for laundering $311M using his Helix mixer operation.
USA Office of Foreign Assets Control (OFAC) sanctioned Chinese nationals for laundering over $100M in crypto of North Korean ransomware proceeds through several banks.
"If Kunal Kalra's banks had been using Armada to monitor their accounts, we could have identified Kalra much earlier," said CEO of CipherTrace Dave Jevans. "Similarly, if M.Y. Safra Bank had deployed Armada to detect illegal cryptocurrency transactions, they would not be scrambling to meet the OCC's requests. Though the OCC did not levy a fine, M.Y Safra Bank must implement an independent BSA audit, monitor and report suspicious activity, institute an independent party to review past activities, and hire a BSA officer and sufficient supporting staff— all within 180 days."
Armada provides banks and financial institutions with the following services:
- Conducts KYC to identify virtual asset customers, VASPs, and unregistered MSBs
- Enables enhanced due diligence of high-risk virtual asset payments
- Reveals counterparty risk associated with hundreds of VASPs and unregistered MSBs
CipherTrace analyzes KYC and transaction risks on over 500 VASPs and is expanding its offering to banks and other financial services with the rollout of Armada. Ultimately, Armada mitigates cryptocurrency AML and counter-terrorist financing risk for financial institutions by identifying customers falsifying their crypto intentions, flagging transactions to and from high-risk crypto counterparties, and collecting evidence of the counterparty risk.
For media inquiries, please contact Kili Wall at (310) 260-7901 or Kili(at)MelrosePR(dot)com
CipherTrace, industry-leading cryptocurrency intelligence firm, aims to protect financial institutions from crypto laundering risk and grow the crypto economy by making virtual assets trusted by governments and safe for mass adoption. CipherTrace delivers the world’s most comprehensive cryptocurrency intelligence to detect money laundering, power law enforcement investigations, and enable regulatory supervision. Created to develop digital currency and blockchain tracing and security capabilities, CipherTrace provides visibility into 87% of global trading volume with hundreds of millions of attribution data points and can trace more than 800 virtual assets, including BTC, BCH, ETH, ERC-20, Tether, and LTC tokens. The company was founded in 2015 by experienced Silicon Valley entrepreneurs with deep expertise in cybersecurity, eCrime, payments, banking, encryption, and virtual currencies. The US Department of Homeland Security Science and Technology (S&T) and DARPA initially funded CipherTrace. For more information, visit http://www.CipherTrace.com or follow us on Twitter @CipherTrace.