How Do KYC and AML Procedures in the Crypto Space Help Prevent Fraud? | HackerNoon

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Early November was not an easy time in Hong Kong’s office of a global cryptocurrency exchange, FTX. - kyc amlcompliance

After battling their competitor’s comments on social media on November 6, the company paused withdrawals on November 8. In the next two days, after hearing a vague comment from their colleagues in the Bahamas, the Asia-based employees were told they did not need to come to the office anymore. This fiasco of FTX’s management and their implementation of the Anti-Money Laundering procedures became a sensitive topic in the community ever since.

How Alameda Research and FTX could both be involved in transacting users’ funds while being completely separate entities is now only part of history that we might never get to understand. KMPG published their version of what happened in this comprehensiveWhat personally surprised me the most in this heinous case was the fact that FTX was admitted to have a robust due diligence when it was evaluated by investors, such as Ontario Teachers’ Pension Plan, Sequoia Capital, and Temasek.

Secondly, implementing wallet and transaction checks helps avoid having assets of certain customers blocked and prevented from entering the ecosystem. With proper checks in place, customers can be sure to never get involved in transactions that would damage their wallets’ reputation and history. And finally, putting AML and KYC tools in place makes it possible to immediately identify scammers and block their funds, increasing the level of service security by several times. A recent example is an investigation done by AMLBot’s team about sanctioned Iranian entities transacting with Binance. In the publishedwith diagrams, the research is described in a more detailed way.


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