Chainalysis today announced the launch of suspicious cryptocurrency transaction alerts in Chainalysis Know Your Transaction (KYT), the real-time anti-money laundering (AML) compliance solution for monitoring cryptocurrency transactions. It is the first compliance alerts solution available across 15 cryptocurrencies.
Interested in learning more about KYT Alerts? Get in touch with our team
Chainalysis KYT alerts are designed to help cryptocurrency businesses and financial institutions mitigate exposure to regulatory and reputational risk by helping compliance teams focus on the most urgent activity and enforce compliance policies while better allocating resources.
"As lawmakers and regulators focus their attention on the industry, it is more critical than ever that cryptocurrency businesses demonstrate compliance best practices," said John Dempsey, VP Product, Chainalysis. "Every minute counts when managing exposure to sanctioned entities, hacked funds, darknet markets, and other illicit activities, which is why Chainalysis is investing in fast, actionable alerts to help our customers mitigate risk across cryptocurrencies."
Chainalysis KYT has always provided real-time transaction monitoring for large volumes of cryptocurrency activity to identify high risk behavior, and now alerts are generated whenever a transfer involves a risky counterparty and crosses a value threshold. Alert levels include Severe, High, Medium, and Low, and are based on factors such as category, service, direct versus indirect exposure, direction of funds, and amount. Alerts are available for all 15 cryptocurrencies supported by Chainalysis, including Bitcoin, Ether, Bitcoin Cash, Litecoin, and top stablecoins and ERC-20 tokens such as Tether, Maker, and Dai, with additional cryptocurrencies coming soon.
With alerts functionality built directly into the user interface and API, cryptocurrency businesses and financial institutions can keep track of, investigate, or take action on risky transfers. Additionally, customers can customize risk parameters based on their own business policies to help allocate resources accordingly.
"As a New York Trust company we are required to monitor transactions on and off our platform," said Michael Breu, Gemini's Chief Compliance Officer. "Tools like KYT alerts, which provide real time and ongoing blockchain analysis, coupled with Gemini's own compliance policies, help us meet our regulatory obligations."
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.