Majority of crypto transactions not being traced ⎸CipherTrace
A report published by CipherTrace recently points out that financial institutions can hardly detect the majority of the suspicious crypto transactions
In the past two years, banks around the world have flagged a total of 134,500 suspicious transactions involving cryptocurrencies.
However, according to blockchain analysis and crypto intelligence firm CipherTrace, this figure barely scratches the surface.
The CipherTrace report indicates that the Financial Crimes Enforcement Network has witnessed an upswing in odd crypto transaction records from financial institutions since May 2019.
The blockchain forensics firm adds that most banks lack proper and adequate systems to detect and identify cryptocurrency-related accounts and transactions.
The systems in place currently use lists of the names of crypto exchanges and digital asset service providers to mark out transfers associations with cryptocurrency.
This system however, is flawed and inefficient. According to CipherTrace, “A typical name-based system may entirely miss up to 70% or more of the crypto exchanges out there, and up to 90% of the actual transaction volume”.
The report further reveals that only a handful of banks screen for exchanges not included in the top 100. Besides, the majority of crypto exchanges operate under different business names that do not match their branding name. This highlights yet another area where the name-matching system fails to identify shady and questionable crypto transactions.
Based on these findings, CipherTrace recommends that financial institutions adopt more effective tracking systems that trace the accounts associated with P2P crypto exchanges and smaller virtual currency kiosks before matching the contact info of small digital asset service providers with customer records to identify irregular activities.
The report by CipherTrace comes just after the US Internal Revenue Service (IRS) agreed to a $249,900 contract with the firm Blockchain Analytics and Tax Software to improve and scale-up its crypto tracing abilities. CipherTrace also disclosed it had built a tool that traces Monero (XMR) transactions for the Department of Homeland Security in August.
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Sam Grant, Khareem Sudlow