When the June 3 deadline for complying with the Sixth Anti-Money Laundering Directive hits, businesses around the world will be legally liable for KYC compliance.
When the European Union’s Sixth Anti-Money Laundering Directive comes fully into force on June 3, every company that provides financial services to cryptocurrency customers and businesses will have to comply with much tougher regulations about when and how they identify customers.
Strictly speaking, the 6th AML Directive (6AMLD) has been in force since December, but crypto service providers outside the EU have another two months to come into full compliance.
This means all e-wallet providers and digital asset exchanges — among others — that have any European customers will need to be registered with EU authorities and perform stricter Know Your Transaction (KYT) monitoring for illegal activities involving fraud, cybercrime, and money laundering and terrorism financing.
It’s worth noting that 6AMLD is the first anti-money laundering directive to specifically target cybercrimes. In addition, it requires EU member states to work together to investigate and prosecute offences, and closes a significant number of loopholes.
From a corporate point of view, the potential consequences are both broader and harsher: Unlike the 5th AML Directive, 6AMLD holds companies and other legal entities directly liable for violations, not just individual employees. In practice, that means that companies will no longer be able to simply blame rogue employees. And penalties are stiffer — including heavy fines and even closing down businesses altogether.
This means that it is even more important than ever for cryptocurrency service providers, banks, and financial institutions to ensure that they have compliance strategies in place and staff trained to identify potential criminal behaviors such as money laundering and the financing of both terrorism and nuclear proliferation.
Tools of the trade
Developed by the Bitfury Group, Crystal Blockchain provides three basic services to banks and financial institutions, cryptocurrency exchanges and businesses, government agencies, and virtual asset service providers (VASPs): KYT monitoring software, compliance training, and expert analysis.
Crystal Blockchain’s KYT monitoring software provides compliance tools that analyze and visualize crypto transaction flows, identify entities behind transactions, and provides risk scores based on blockchain interaction that can be used with anti-money laundering (AML) and Know Your Customer (KYC) procedures.
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Beyond the software tools, Crystal Blockchain provides customized training for compliance teams on best practices for compliance workflows, including onboarding, monitoring, case management, and reporting. Additionally, it can help clients integrate the software into existing AML/KYC monitoring systems.
The company also produces regular analysis, with insight reports and interactive maps drawn from proprietary data from its explorer tools. A recent report focused on stolen crypto withdrawal and transfer patterns, with the team noting that criminals are moving stolen crypto assets more quickly, and using fewer “hops” to mask the final destination. Crystal Blockchain also offers interactive maps, updated quarterly, focused on things like a comprehensive, 10-year analysis of security breaches and fraud involving crypto.
With more than 150 clients, thousands of addresses checked daily, 70 countries covered, and 900-plus exchanges explored, Crystal Blockchain offers broad coverage. It currently supports Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum — including ERC-20 and ERC-721 tokens — Ethereum Classic, Tether, Litecoin, and XRP.
The company focuses its services on three customer types: Banks and financial institutions that need AML and countering the financing of terror (CFT) compliance tools; blockchain payment services that need due diligence tools; and government agencies that need blockchain analytics tools.
Along with 5AMLD and 6AMLD regulation, Crystal Blockchain supports other regional regulatory regimes, as well as international requirements such as Financial Action Task Force (FATF) rules. It promises a fast response time to regulatory changes.
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