Crypto AML Check: Why It Is Needed and How Transaction Screening Works

Cryptocurrency transactions make it possible to transfer digital assets quickly between users around the world. At the same time, the transaction history of most public blockchains remains recorded on-chain, allowing specialized AML tools to analyze the origin and movement of digital assets.

In this article, we explain what a cryptocurrency AML check is, which risk factors may be considered during transaction analysis, and why some cryptocurrency exchanges may require additional verification.

What Is AML in Cryptocurrency?

AML (Anti-Money Laundering) refers to procedures designed to identify and reduce risks associated with funds that may originate from potentially illicit sources.

In the cryptocurrency industry, AML analysis can use blockchain data to evaluate the transaction history of digital assets and identify possible connections between wallet addresses and different risk categories.

Such screening procedures may be used by cryptocurrency exchanges, exchange services and other digital asset businesses.

What Is Analyzed During an AML Check?

Depending on the analytical systеm being used, an AML check may evaluate transaction history and connections between a wallet address or transaction and various sources of risk.

Higher-risk categories may inсlude connections with:

• fraudulent projects and stolen assets;
• ransomware-related addresses;
• sanctioned addresses and entities;
• darknet marketplaces;
• illegal services;
• other sources classified as higher risk.

The presence of a particular risk indicator does not necessarily mean that the funds are illegal. AML analysis should be considered together with other available information and the internal policies of the service conducting the review.

What Is a Risk Score?

AML systems may assign a wallet address or transaction a particular risk assessment, commonly referred to as a Risk Score.

This score helps estimate the potential level of risk based on identified connections and the previous movement of digital assets.

Risk Score calculation methods and their interpretation may vary between analytical providers. Therefore, the same transaction may not necessarily receive an identical risk assessment across different AML systems.

Why Do Crypto Exchange Services Perform AML Checks?

AML screening helps reduce the risk of interacting with digital assets associated with higher-risk sources.

This is important not only for cryptocurrency services themselves but also for their users, as exchanges, payment providers and other market participants may use their own transaction monitoring and risk assessment systems.

On the official UnionXBit website, applicable exchange conditions and procedures are described in the service rules and AML/KYC Policy.

What Happens If an Elevated Risk Is Detected?

The detection of elevated risk factors does not necessarily mean that funds will automatically be blocked or lost.

Depending on the circumstances, a transaction may require additional review. The service may request information necessary to evaluate the transaction in accordance with its applicable rules and AML/KYC Policy.

Users should therefore review the AML/KYC terms of an exchange service before transferring cryptocurrency.

What Information May Be Required for Additional Verification?

The information required depends on the specific circumstances of the transaction. During an additional review, a service may request information that helps clarify the transaction or the origin of the digital assets.

This may inсlude:

• the cryptocurrency transaction ID (TXID);
• the wallet address;
• information about the source of the cryptocurrency;
• confirmation of the purchase or receipt of the digital assets;
• other information required under applicable AML/KYC procedures.

The exact requirements depend on the circumstances of the transaction and the results of the review.

Can You Check Cryptocurrency Before an Exchange?

Specialized blockchain analytics services can be used to assess cryptocurrency wallet addresses and transactions.

However, the result of a third-party check does not guarantee that another platform will provide exactly the same assessment. Different AML systems may use different databases, analytical methods and risk criteria.

Are AML and KYC the Same Thing?

No. AML and KYC are related concepts, but they serve different purposes.

AML refers to procedures designed to analyze and reduce risks associated with the origin and movement of funds.

KYC (Know Your Customer) refers to procedures used to identify and verify a customer.

In certain circumstances, the results of an AML check may lead to additional customer verification in accordance with the rules of the particular service.

How Can You Reduce the Risk of Problems When Exchanging Cryptocurrency?

Before completing an exchange, users should consider the following:

• use reputable sources when acquiring cryptocurrency;
• keep TXIDs and relevant transaction information;
• verify the blockchain network before sending funds;
• review the exchange service’s AML/KYC Policy in advance;
• never send funds to addresses provided outside an active exchange order;
• verify the official website address before starting an exchange.

Safe Crypto Exchange Starts With Checking the Details

AML procedures have become an important part of modern cryptocurrency infrastructure. Their purpose is to identify potentially higher-risk transactions and allow services to make decisions based on the information available to them.

When exchanging cryptocurrency, always verify the recipient address, selected blockchain network, exchange order details and applicable service rules before sending funds.

You can view available exchange directions, current rates and exchange conditions on the
official UnionXBit website.

UnionXBit — cryptocurrency exchange made simple.

This material is provided for informational purposes only. AML/KYC verification procedures are governed by the applicable rules of the service.