Crypto Companies Process $2 Billion At Major Banks Without Their Knowledge: CipherTrace


CipherTrace launched a press release on December 16, claiming it has discovered that each of the most important commercial banks in the US has an unregistered crypto business using their own payment networks in order to process funds. These unregistered crypto money service businesses, also known as MSBs, are cryptocurrency exchanges too.

Not All Banks Are Equipped to Identify VASPs as MSBs

The funds of the US Bank Secrecy Act and Financial Action Task Force’s (FATF) Travel Rules ask banks to identify the MSBs that are employing their networks. However, CipherTrace says many of these banks aren’t equipped to identify virtual asset service providers (VASPs) and cryptocurrency exchanges as MSBs. It furthermore adds the FATF and BSA guidance that has to come in effect for all G20 nations will make things more critical when it comes to both compliance and identification. At a November San Francisco CipherTrace Cryptocurrency Travel Rule Information Sharing Architecture Conference, Carole House from the US Treasury Financial Action Task Force (FinCEN) expressed her worries on the banks not being ready for the statutory revisions that are about to come. This is what she said:

“It would be interesting to know how many financial institutions operating in this space are able to identify a [crypto-business] recipient as a financial institution on the basis of its wallet reference number, or other information that it currently has available to it.”

CipherTrace Launched Its Crypto Risk Intelligent Product

Analyzing the compliance of financial institutions with Anti-Money Laundering (AML) regulations, CipherTrace has decided to launch a Crypto Risk Intelligence product meant to give banks a hand when it comes to reducing risks related to crypto while making payments. CipherTrace is already monitoring more than 500 crypto businesses by analyzing risks and compliances, also by generating the AML filtering information banks and other financial entities can use. This is what CipherTrace’s intelligence tool is focusing on:

Detecting the unknown risks taking place between VASPs and bank networks that take care of ACH and SWIFT payments.

  • Offering access to the firm’s risk scores when it comes to crypto businesses
  • Determining the peer-to-peer systems and unregistered MSBSs using bank services.
  • Fighting the illegal or money laundering crypto transactions taking place on the dark web

The Industry to be Reshaped by Regulations

As repots are saying, FinCEN has already conducted some reinforcing actions against unregistered peer-to-peer crypto exchanges that violated the laws of money transmission, back in April 2019. While businesses are still adjusting, the director at FinCEN has noticed that this month, the crypto industry has started to be in line with the money transmission regulations. The agency believes its May 2019 guidance has had a very positive impact. CipherTrace stated the new regulations released by the FATF are going to change the way crypto businesses have to operate because they will be asked to track the way customers are sending funds too, not only the transactions.

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