Lendingblock appoints Chainalysis as its corporate anti-money laundering launch partner ahead of global regulatory guidance
Chainalysis, the blockchain analysis company, is working with Lendingblock, the institutional lending exchange for digital assets, to implement anti-money laundering technology and best practices in anticipation of global regulatory guidance from the Financial Action Task Force (FATF).
Lendingblock is committed to meeting the stringent and comprehensive compliance requirements set by its external regulator, the Gibraltar Financial Services Commission, and to adopting global best practices from the traditional capital markets space where regulation of digital assets is forthcoming.
By partnering with Chainalysis, Lendingblock is augmenting existing in-house KYC standards and enforcing due diligence processes, thus protecting its institutional client base including hedge funds, trading houses, exchanges, and market makers, while also supporting the progression of regulatory frameworks. By proactively establishing strong anti-money laundering (AML) and combating the financing of terrorism (CFT) procedures, companies like Lendingblock will be prepared for regulatory enforcement and stay ahead of the competition.
The FATF, the inter-governmental body that sets global standards relating to AML and CFT, is expected to issue guidance in the coming weeks for jurisdictions that fall under its oversight, which consists of over 180 countries, to start regulating their cryptocurrency markets.
"We are beginning to see the cryptocurrency community preparing for an influx of enforcement actions and regulatory guidance over the coming months," said Jonathan Levin, Co-founder and COO, Chainalysis. "Exchanges like Lendingblock are positioning themselves ahead of the curve by putting these procedures in place now to support clients globally."
"It is important to create a secure and transparent lending exchange that not only meets the needs of our regulator, but also one that our institutional clients trust," said Steve Swain, CEO, Lendingblock. "Partnering with Chainalysis helps us ensure top-of-the-line compliance standards for our clients."
Chainalysis KYT (Know Your Transaction) helps companies doing business with cryptocurrencies meet global regulatory requirements and reduce manual workflows through automated counterparty risk screening. Cryptocurrency businesses and financial institutions are able to filter their user bases and access real-time data, case management, and reporting features. Chainalysis KYT is being used by approximately 110 cryptocurrency businesses and financial institutions in 35 countries. In April, Chainalysis closed its $36M Series B round led by Accel with participation from Benchmark, Sozu, and MUFG.
How Transaction Monitoring Works at Chainalysis
One of the reasons Chainalysis KYT is so popular is that it uses global anti-money laundering (AML) standards common across regulatory bodies. We apply these standards when each transaction is screened.
Cryptocurrency businesses also need to understand the aggregate risk profile of each of their users. That’s why Chainalysis KYT provides a view of risk profiles at the user level, which reflects all of a user’s screened transactions. For example, if an organization has a user who receives funds from a darknet market, our software automatically flags that transaction as high risk. If the user sends funds to a regulated exchange, our software marks that transaction as low risk. And so on. Every screened transaction feeds into a user’s risk profile. Chainalysis KYT displays all user profiles, sortable by high, medium or low risk (using traffic light colors) for easy scanning.
We apply our risk methodology in real time to all users within an organization’s user base. This saves compliance teams from laborious, manual screening work. They can instead focus on developing comprehensive compliance programs. Organizations that work with us tell us this has enabled them to meet regulatory expectations and launch or grow their businesses.
Customizable risk level
We’re now giving our customers the ability to adjust the risk level of a category or a service. For example, not all jurisdictions around the world treat gambling the same way. In some countries, gambling is not considered a legitimate business activity and thus online gambling sites would be treated as high risk. In other countries, gambling is not considered illicit, which means properly licensed online gambling sites would be treated as low risk.
The ability to customize the risk level of categories and specific services means our customers can automate even more of their compliance workflows.
One of the most useful facets of Chainalysis KYT is having a view of all users and their risk profiles directly accessible upon first logging in. It provides a visual alert of which users have high risk profiles and therefore require the most immediate attention. In keeping with the spirit of simplified visual cues, we have now launched a dashboard that summarizes key indicators at the total organization level. For example, organizations can now see what percentage of their user base is falling under high, medium or low risk. They will soon be able to see things like total exposure by category, or total transaction volume per day. These and other metrics will provide our customers additional understanding of their organization’s total exposure trends over time.
At Chainalysis, we strive to provide as much support to our customers as we can. To make it easier to interact with us, we added in-app chat to Chainalysis KYT. This allows our customers to send us questions or feedback without having to leave the environment. Our team typically responds within minutes.
We know software is most valuable when it makes the lives of our customers easier and more productive. This means we’ll continue to add intuitive capabilities to our compliance products while increasing versatility for ongoing transaction monitoring. In the coming months, we will improve how transaction information is displayed. We will also boost our monitoring capabilities for other cryptocurrencies beyond Bitcoin. And we will deepen the integration with Chainalysis Reactor, which is used for enhanced due diligence and investigations.
The momentum around cryptocurrency compliance is only just starting and we look forward to continuing to offer software that builds trust in blockchains.