Top 10 US Retail Banks Unknowingly Serve Crypto Startups, CipherTrace Claims

CipherTrace revealed research Monday showing that the top 10 retail banks by assets managed in the U.S. worked with unregistered crypto money services businesses by transmitting funds on their payment networks.

AccessTimeIconDec 16, 2019 at 7:35 p.m. UTC
Updated Sep 13, 2021 at 11:49 a.m. UTC

John Jefferies has yet to find a retail bank that doesn’t have crypto-related transactions on its payment network. 

CipherTrace's chief financial analyst published research Monday showing that the top 10 retail banks by asset size in the U.S. worked with unregistered crypto money services businesses by transmitting funds on their payment networks. CipherTrace Labs also announced a tool to help banks identify those transactions and assess the risk profiles of Virtual Assets Service Providers (VASPs). 

“We think of it as two types of banks: Banks that love crypto and want to embrace it and understand the risk profiles and banks that hate crypto – those banks want to make sure there are no crypto transactions of any shape or form on their network,” Jefferies said. “But whether they want to acknowledge it or not, they’re all doing crypto.”

The analysis shows that a typical large bank is processing as much as $2 billion in undetected cryptocurrency-related transfers, such as customers sending fiat to VASPs. This poses a threat to banks trying to stay in compliance with the U.S. Bank Secrecy Act and Financial Action Task Force's travel rules requiring financial institutions to identify the MSBs they facilitate.

The blockchain sleuthing firm is offering banks a tool called CipherTrace Crypto Risk Intelligence which it developed in coordination with bank security teams. 

The tool helps banks by revealing risks created by hidden connections between VASPs and bank payment systems, providing risk scores of more than 500 crypto exchanges and other VASPs, identifying unregistered MSBs and P2P schemes using bank accounts and identifying dark web risks and stolen financial products for sale that use cryptocurrencies for launding funds, the company claimed.

CipherTrace also aims to help banks identify crypto companies that are low risk enough for them to bank. The tool gives bankers access to CipherTrace’s monitoring of more than 500 crypto companies and provides risk scores, compliances scores and anti-money laundering filtering data for financial institutions.

CipherTrace is entering into a space that’s increasingly interested in serving banks.

Last week, blockchain forensics startup Elliptic announced Elliptic Discovery, a tool providing bank compliance teams with up-to-date risk profiles of more than 200 of the largest exchanges globally. TRM Labs’ offers a risk-score for cryptocurrency transactions, with the startup analyzing more than a dozen blockchains for banks looking to fight money-laundering and fraud in the crypto sphere. Banks have also used Chainalysis’ transaction-monitoring tools to be able to compliantly work with crypto firms.


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