The Financial Action Task Force (FATF) has recommended regulators profile cryptocurrency users so they can better identify criminal activity.
- FATF, whose guidance is heeded in more than 200 countries, said in a report Monday that it had identified certain behaviors and characteristics that serve as red flags for regulators trying to detect illegal or illicit transactions.
- One of the primary methods, the international financial watchdog said, is to compare a user's transaction activity with that of his or her profile.
- This can include instances where a deposit or transaction amount is inconsistent with a user's available wealth or historical financial activity, perhaps signaling money laundering, a scam or a money mule (where someone transfers illicit value on behalf of somebody else).
- For instance, it might be suspicious if a young user, with no known business interests, started receiving large amounts in payments of a commercial nature from various parties all around the world.
- Other red flags include whether the person in question is much older than the average age of a crypto user, as well as if the person has a criminal record or has been active on websites and public forums associated with illicit activity.
- The new report comes over a year after FATF recommended national regulators mandate virtual asset service providers (VASPs) – e.g. exchanges or wallet providers – retain and share identifying information on parties involved in transactions over a certain amount, known colloquially as the Travel Rule.
- In Monday's report, the financial watchdog said other red flags include instances where users send crypto to exchanges with no known know your customer/anti-money laundering (KYC/AML) checks, or where they are sending transactions that are just below the Travel Rule threshold.
- Indeed, monero is one of the favored cryptocurrencies for hackers, as it mixes transaction data together making it easy for them to offload stolen value on unsuspecting exchanges.
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