Home Business & Industry How Anti-Money Laundering Helps Maintain Safety in Crypto

How Anti-Money Laundering Helps Maintain Safety in Crypto

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Cryptocurrencies have reestablished the world of payment solutions, having become an alternative to traditional transaction methods. However, these developments have also led to significant security and information concerns, with illicit activities taking advantage of blockchain technology and capabilities.

To combat these issues, platforms and crypto businesses have taken significant steps to promote the security of blockchain and DeFi platforms, minimising the chances of cyber attacks and crypto hacks. Anti-money laundering (AML) practices have been widely adopted to prevent malicious programmes from misusing cryptos and engaging in illegal activities.

Explaining AML

Understanding the nature of cryptos and their potential for suspicious activities is crucial. Decentralised finance relies on shared control and distributed power, resulting in a lack of a regulatory framework for blockchains, cryptocurrencies, and DeFi projects. Crypto developers and enthusiasts advocate for decentralisation but are expected to perform in good faith. Crypto transactions and wallets do not require providing personal information or details to preserve identity, creating a gap that many manipulate to carry out illegal transactions.

Money laundering is a common illicit practice for those misbehaving operators who exchange their illegally earned money for cryptocurrencies and create a legal clean slate for their business. Local governments and regulations have started adopting anti-money laundering practices, requiring crypto exchanges and operators registered in different jurisdictions to adhere to these rules to combat illegal activities and promote a healthy DeFi ecosystem.

How to assess AML risks

AML risk assessment involves collecting data, categorising and structuring information, identifying and analysing risks, addressing potential risks, documenting and maintaining the system, and continuously monitoring and improving. 

The AML risk assessment protocol is not an applicable solution only when needed but rather a system of ongoing monitoring and observation that ensures sustainable service development and promotes the overall security of transactions.


The increasing security concerns accompanying cryptocurrencies have caused many to avoid using cryptos and decentralised platforms amid fears of compromised security and cyber threats. However, developing anti-money laundering practices helps companies ensure a safer environment to transact with Bitcoin and other crypto coins by tracking activities, identifying potential risks, and taking necessary measures to prevent them. These activities contribute to growing a reliable crypto business and promoting the overall security of DeFi.

David Radar, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.

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