What blockchain companies needs to be AML compliant?

There is no doubt that the crypto industry has fully realized the importance of building credibility, transparency, authority and trust. Decentralized nature of digital assets seems to be a favorable condition for criminals and requires increased compliance, which has prompted many regulatory bodies and policymakers to develop and implement regulations to prevent cryptocurrencies from being used for illicit financing activities.

To combat financial crimes, a number of legislative acts have been adopted in many countries across the Globe and a concept of a Virtual Asset Service Provider (VASP) has been introduced. VASPs must comply with the AML and KYC frameworks. As a Swiss financial intermediary and being obliged to follow AML laws, FinchTrade has searched for but has not managed to find a suitable solution in the open market. Thus, such a solution has been developed in-house and FinchTrade is pleased to launch MarketGuard, which is the AML & KYC solution for blockchain businesses.

Pioneering system to automate complex compliance procedures for a blockchain company

Regulated financial institutions, which work with digital assets, have to:

• collect necessary individual, company and shareholders data for verification
• provide automated enhanced due diligence mechanism and on-going monitoring
• process realtime in-depth transaction monitoring (KYT) and risk assessment
• produce regular regulatory reports

With MarketGuard in place, you are backed with a robust AML / KYC system that covers all the above mentioned points and allows you to stay safe and compliant with the rapidly-changing regulation.

Onboarding. Customer onboarding is an integral part of any client business. On the one hand, it must be quick and seamless; on the other, it must be thorough enough to identify potential risks. Besides, automation is crucial for scalability, thus, the risk scoring methodology must be digitalized into a robust automated identity verification system.

Ongoing monitoring. Financial institutions are obliged to have a toolkit in place to ensure that their clients comply with your AML policy on a daily basis. Such a toolkit must monitor in real-time all shareholders, UBOs and key personnel of a client to ensure they are not in sanctions, PEP or other specific lists. In addition, it must send instant notifications of any change in client status.

Know your transaction (“KYT”) solution is aimed at performing on-chain transaction analysis in real time to identify suspicious behavior or fraudulent transactions on various blockchains such as Bitcoin, Ethereum, Litecoin, Tron, Bitcoin Cash, XRP, Binance Smart Chain, Tezos etc. There are certain parameters that are worth considering:

• Daily / monthly limit per client
• Payment country risk for fiat and crypto transactions
• Suspicious patterns recognition
• Blockchain transaction scoring and implied risk-factors
• Company-related custom risks

Regulatory reports. As a result of the automated verification and ongoing monitoring, you will get reliable proof that will help control risks and protect yourself against fraud and regulatory fines. With MarketGuard, you can be confident that all of your clients and operational counterparties comply with regulation frameworks you operate in and your business is safe and secure.

IT security and tech

We like to be boring and pedantic when it comes to safety. MarketGuard is:

• Secure: 2FA, data encryption, multi-role accounts
• Reliable: regular backups and data restoration checks
• Manageable: transaction reports and analytics
• Easy-to-integrate: AWS cloud-based plug-and-play solution

Sorting out AML compliance is a very resource consuming challenge. Plug-and-play automated MarketGuard solution allows you to stay focused on developing your business while our software will deal with thousands of yours and your client transactions.

We have selected and integrated the leading service providers to enhance our solution:

1. AML/KYC/KYB: SumSub
2. Cloud infrastructure: AWS
3. Blockchain analytics (KYT): Crystal*, Scorechain
4. Crypto custody: Copper, Fireblocks*
5. API integration with payment institutions: BCB Group, ClearJunction, Intergiro*, NexPay
6. API integration with trading venues: Binance, Bitfinex, Coinbase, Finery Markets, Kraken
7. Reporting: Slack, email

* coming soon

Quotation by the COO of FinchTrade AG Lesya Margris:
Proper AML monitoring is a big challenge for any financial institution. The matter becomes more complicated, when one works with the high-risk asset classes, such as cryptocurrencies, and has to comply with Swiss regulation. In order not to be overwhelmed with the daily routine and being able to accurately identify the risks, we have invested a year of team’s work and created the elegant solution which provides a transparent and user-friendly suite for crypto compliance.

For more information about how we can help reach out to us. We're here to help and answer any questions you may have.

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