Money Laundering through Casinos – How to tackle it?

An issue that has been ignored for too long is fraudulent activity via the casino system. It has now become a recurring issue, as gambling giants like Entain recently received a fine of more than £17 million for violating anti-money laundering protocols. The failure of these big gambling players to clamp down against money laundering not only contributes to the proliferation of criminal activity such as human trafficking and illicit arms dealings, but it also highlights how casinos now serve as a platform for modern slavery.

Money laundering is the illegal process of concealing the origins of money obtained from criminal activities. It is a severe crime, and yet, sadly, many casinos still fail to tackle it effectively. From a lack of proper regulations to inadequate tracking systems, this article will discuss why casinos still need to crack down on money laundering and how they can tackle it. We will also discuss the implications for businesses and what measures should be taken to prevent money laundering in the future.

Money laundering in Casinos

Global gambling-industry financial penalties amounted to approximately $128,913,840 in 2022, up 166% from $48,642,992 in 2021, according to USA-Casino.com. As of October 2022, the UK’s gambling regulator had charged 16 operators $48m (£45m).

Casinos have long been associated with money laundering due to the large amounts of cash that change daily. Despite this, casinos have failed to crack down on money laundering, and the problem seems to be getting worse. 

There are several reasons why casinos have failed to tackle money laundering. A few majors are 

  1. Lack of tracking of the fund source – because cash is often used. 
  2. Lack of AML policies. 
  3. Being located in countries with lax financial regulations makes it easy for criminals to launder money 
  4. Inadequately trained employees to spot money laundering signs and stop the same. 

So how can casinos crack down on money laundering?

  1. They need to put better policies and procedures in place to prevent it from happening in the first place. This includes proper customer due diligence, robust Know Your Customer (KYC) procedures, and more effective monitoring of transactions. As former US gambling regulator Richard Schuetz spoke with USA-Casino.com and said, “Given the inevitable increase of proliferation of online gambling in 2023, one can expect more regulations, and of course more casino and gambling industry fines”.
  2. Casinos need to do more to train their staff to spot the signs of money laundering. This training should cover what to look for when customers withdraw or deposit large amounts of cash and how to report suspicious activity.
  3. Casinos should consider using modern technology. 

The methods used by criminals

Though casinos have been put under increased pressure to stop money laundering, they continue to face many challenges. For one, criminals are constantly finding new ways to launder money, making it difficult for casinos to keep up. Moreover, many casinos still need to do more to crack down on, leaving themselves vulnerable to attack.

So what can casinos do to protect themselves from money launderers better? For starters, they need to be more proactive in identifying suspicious activity. This means being on the lookout for things like large cash deposits or withdrawals, frequent wire transfers, and patterns of betting that seem designed to evade detection.

Additionally, casinos need to ensure they have robust anti-money laundering policies and procedures. These should include KYC (know your customer) checks, reporting suspicious activity to authorities, training staff on the spot, and reporting red flags. By taking these steps, casinos can make it much harder for criminals to use them to launder money.

The Casino’s responsibility

In recent years, casinos have come under increased scrutiny for their role in money laundering. This is because casinos are often used to clean dirty money obtained through illegal activities.

Casinos have a responsibility to ensure that they are not being used to launder money. However, they have failed to crack down adequately on this activity. This is partly because casinos are often reluctant to report suspicious behavior to the authorities for fear of losing customers or damaging their reputation.

There are steps that casinos can take to tackle money launderings, such as better training for staff, improved customer due diligence, and more substantial reporting procedures. However, more must be done to prevent casinos from being used to clean dirty money.

The challenges of combating Casino’s money laundering

Although casinos are some of the most heavily regulated businesses worldwide, they are still struggling to combat money laundering effectively. The challenges are numerous and include both institutional and operational challenges.

Institutional challenges include that many casinos are owned by large, publicly-traded companies, making it difficult to implement adequate anti-money laundering policies. These companies are often reluctant to invest in compliance because it is not revenue-generating and can be seen as a cost center. In addition, there is often a lack of coordination between regulatory agencies, making it challenging to develop a cohesive strategy for combating money laundering.

Operational challenges include that casinos deal with large amounts of cash daily, making it easy for criminals to launder money through them. In addition, many casino customers are international visitors who may be using illicit funds to gamble. This makes it difficult for casinos to vet their customers and identify suspicious activity correctly.

Despite these challenges, there are some things that casinos can do to combat money laundering better. These include increasing transparency around ownership structures, investing in compliance functions, and developing better customer due diligence processes.

Solutions to tackle money laundering in Casinos

Money laundering is a serious problem for casinos. Casinos must implement better policies and procedures to crack down the same. Here are some solutions to tackle:

  1. Improve Know Your Customer (KYC) Procedures

Casinos need to improve their Know Your Customer (KYC) procedures. KYC is the process of identifying and verifying the identity of customers. This is important because it helps casinos ensure they are not doing business with criminals or terrorists.

  1. Implement Better Record-Keeping Practices

Casinos need to implement better record-keeping practices. This means keeping track of all transactions, both incoming and outgoing. This will help identify any suspicious activity.

  1. Use Technology 

Various technologies can be used to help combat money laundering. For example, casinos can use software that flags suspicious activity. They can also use data analytics to identify patterns of behavior that may be associated.

  1. Cooperate with Law Enforcement Agencies

Casinos should cooperate with law enforcement agencies in order to crack down on. This includes sharing information about suspicious activity with the authorities.

Conclusion

Money laundering is a serious problem for casinos and other gambling establishments, as it has the potential to lead to criminal activities. However, by investing in stronger AML systems and tightening their compliance regulations, casinos can reduce their chances of getting involved in such frauds. Additionally, they should also train staff on identifying suspicious activity and take steps toward improving customer verification processes. By accepting these necessary measures, casinos can protect themselves from being used as vehicles for money launderers while allowing customers peace of mind that all transactions are carried out legitimately.

A more proactive approach can detect and prevent money laundering. This can be done through improved customer due diligence practices and enhanced internal processes such as reporting suspicious activity immediately. With increased vigilance, casinos can ensure they remain compliant with regulations while reducing the threat of criminals using their services for illegal activities.

The latest AML onboarding solutions can help casinos prevent their operations from becoming dirty money laundering channels by tackling common AML malpractice. Technology can be the winning jackpot to clean up casino operations.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
You can reach out to our team at reachout@signzy.com

Written By:

Shraddha is a passionate Digital Marketer and a versatile leader, working as the Director of Marketing at Signzy. She is a goal-driven professional with excellent innovative skills. Having 11+ years of experience across industries including travel, SNV, healthcare, and Fintech, Shraddha considers herself a self-empowered and self-driven individual ready to take on challenges and proactively rise to occasions in crisis. A professional who ardently believes in the right work-life balance, she ensures to spend quality time with her family. This has a positive effect on her professional life and pursuits.

KYC, KYB, And KYCC- How Specializing Verification Improves Processes

Customer onboarding has historically included identity verification. The necessity for ID card verification still exists, but our society has gone digital, changing how we execute identity verification and why we need it. This is where KYC, KYB, And KYCC come into play.

In the past, unless there was a prior relationship, corporate entity verification was handled internally through extensive physical background checks. This made the client onboarding process vulnerable to fraud and bias. The transition to digital did little to change the way things are now. Customer onboarding continued to receive a lot of attention, but Business to Business (B2B) lagged.

Regulations and stringent rules for due diligence have increased protection for all parties while making it more straightforward for banks, financial institutions, and companies to onboard consumers.

Data about customers and businesses continued to be in danger, and fraud increased. As it was up to the enterprises to follow and put these rules into practice, many continued to disregard developing efficient ID validation systems, leaving holes in the onboarding and compliance process.

 

What Makes KYC Verification Insufficient For B2B Processes?

 Know Your Customer (KYC) regulations are centered on specific consumers, as the name suggests. Businesses and other financial institutions were left to decide how to handle their business clients in light of this. Unfortunately, that resulted in lapsed ID verification far too frequently and essentially nonexistent B2B customer onboarding.

Customers and companies alike paid the price for the absence of security standards in the form of an increase in money laundering, fraud, identity theft, malware and virus attacks, hacked accounts, stolen data, and, ultimately, money. As a result, global ID verification and document verification services were considered unneeded unless the customer was considered high-risk, and basic due diligence was the rule.

For complete customer due diligence, there were four crucial elements for KYC verification.

  • Validating identification and documents
  • Identification and confirmation of beneficial owners
  • To create a risk profile, one must comprehend the nature and purpose of customer connections.
  • for reporting questionable transactions and managing digital identities, ongoing behavior monitoring, and transaction screening

These ignored organizational structure, who the significant decision-makers were, and whether or not they differed from the constantly-changing signatories. Additionally, it didn’t consider who had access to the records, international payments, their current clients, workers, or suppliers.

The phrase “Know Your Client” was intended to be more broadly used to refer to corporate organizations than the acronym “KYC.” Sadly, many missed the memo, and firms were left to handle B2B customer authentication until authorities stepped in.

 

What Does KYB Get Right That KYC Doesn’t?

 According to the United Nations (UN), 2% to 5% of the global GDP is laundered annually, and an estimated 90% of money laundering activities go undetected. Therefore, it is evident that KYC verification alone cannot stop this from happening.

The losers in the fight against money laundering and other financial crimes are financial institutions. To offer businesses the same anti-money laundering (AML) regulations and address combating the financing of terrorism (CFT) laws, the Financial Crimes Enforcement Network (FinCen) addressed the oversight of KYC. As a result, it implemented Know Your Business (KYB) in 2016.

With the implementation of KYB, the US Customer Due Diligence Requirements for Financial Institutions (CDD), or the EU’s Fifth Anti Money Laundering Directive (5AMLD), the penalties for non-compliance were raised.

Therefore, it was made sure that everyone made an effort to plan and carry out a KYB verification process. KYB aims to identify Ultimate Beneficial Owners (UBO), reduce the risk of money laundering and other fraudulent acts, monitor and screen businesses against blacklists and greylists, and identify UBO.

 

The Requirements For KYB

Aside from the basic customer due diligence that is part of the requirements for KYB, businesses are required to provide the following:

  • Company name
  • Operational status
  • Incorporation date
  • Company address
  • Business registration number
  • Key management personnel

Institutional and corporate rules and requirements could differ. Some people might need further details for the KYB and KYC verification processes. Names and addresses of board members and other essential decision-makers may also be included in the list of Personally Identifiable Information (PII).

Some companies may require that you comply with AML/CTF regulations before doing business with them. Know Your Customer’s Customer (KYCC) rules may apply depending on the type of your organization.

 

KYCC- Its Relevance For Companies

Banks and other financial institutions understood the rationale for KYCC after the Wirecard crisis in Germany in 2020, but the implementation was different. Trying KYCC without the full compliance of all entities was a headache because certain business entities, including payment providers, had several firms that, in turn, did business and had multiple consumers. It may seem unjust to categorize all Fintech or consultancy firms as high risk at the outset, but that occurs when banks need to determine who your company serves.

Regulators and implementers were able to control KYCC better, prevent the development of other fictitious firms, and lessen the possibility of incorrectly designating enterprises as “high risk” by supporting KYCC with AML policies and automation.

 

The Bottomline

While constant monitoring is necessary for KYC Verification, it is only essential for high-risk businesses for KYB. The continuous problem of finding UBOs might make the corporate onboarding process take two to three months. Financial institutions and business clients experience frustration and hopelessness due to these circumstances.

But effective KYB can solve this issue. That’s why you need a reliable service provider for your processes. You can check out www.signzy.com for more details on the services we offer.

 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

 

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

 

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Exploratory Data Analytics To Fight Financial Crime- How To Effectively Prevent Fraud In The Fintech Industry

Combating global financial criminal activity, from money laundering and market misconduct to sanctions, terrorist financing, bribery, and corruption, costs an estimated US$1.3 trillion annually, according to a 2018 Refinitiv Survey. Moreover, with global regulators imposing nearly US$26 billion in fines in the last decade for non-compliance with AML(Anti-Money Laundering), Online KYC(Know Your Customer), and Sanctions regulations, there is a material need for change. Exploratory data analytics can bring this about

Governments and regulators put financial companies on the front line to fight against financial crime with increasingly rigorous compliance requirements. However, trade institutions are finding it challenging to meet these expectations due to legacy technologies and manual processes that no longer keep up with the vast volumes of information produced and the complexity of the global banking ecosystem.

Banks innovating and adopting new technologies and techniques to address regulatory compliance demands will be industry leaders in the years to come. 

Time To Evolve The Fintech Industry With Exploratory Data Analytics

Conventionally financial companies have relied heavily on manual, human intervention in the regulatory reporting process. This remains the common practice today, particularly in the case management workflow. For example, several case investigators review details and write disposition narratives physically before suspicious activities and other compliance issues are reported to them.

However, with the flow of information in and out of banking systems, humans can’t keep pace with demand. As a result, risk alert backlogs are growing faster than operations teams can handle, more often than not. We can use advanced and exploratory data analytics techniques such as AI, machine learning, natural language processing, and cognitive automation to accelerate or automate a significant portion of the labor-intensive work. This reduces operational costs and leaves people free to focus on preventative interventions.

As well as decreasing operational workloads in case management, compliance teams also leverage advanced analytics in many preventative financial crime use cases, including enriching the KYC process, enhancing sanctions screening performance, and monitoring transactional activity, helping to identify risks and opportunities proactively.

Machine learning models accelerate the closure of a risk alert backlog and have a higher degree of accuracy. 

Innovation- Solution to Legacy Issues Using Exploratory Data Analysis

Following are the three examples of opportunities for financial companies and banks to use innovative and exploratory data analytics methods and technologies to improve regulatory compliance, enhance customer experience and lower the cost of operational risk management.

Transaction Monitoring (TM)

In Anti-Money Laundering, ML models enrich transaction monitoring alerts and boost SMR(Suspicious Matter Report) conversion rates – and predict AML scenarios before they occur. In addition, enrichment adds potentially essential details about the customers, beneficiaries, or accounts associated with the respective alert, such as:

  • Using previous cases, SMRs or TTR(Transaction Threshold Reports)
  • Existing scoring processes that assess the potential risk of a transaction, customers, series of transactions, or accounts
  • External information such as subpoenas, law enforcement inquiries, or negative news

Machine learning models detect “true positive” results with improved accuracy than traditional methods and even predict significant events before they occur.

Online KYC– Know Your Customer

Organizations must collect, manage, verify, and validate customer data for KYC checks and compliance to implement the required due diligence and permit apt customer risk assessments or investigations. However, building a comprehensive ‘single view of the customer’ spanning various source systems and multiple digital interactions has been a challenge for financial companies.

KYC checks and verification have traditionally been manual and inefficient processes, often combined with critical data gaps, errors, and quality issues. However, it’s possible to achieve a better perspective of the customer, enhance the data used to implement due diligence, and provide a contextual basis for determining customer risk and detecting suspicious activity by augmenting human activity with machine learning techniques. So now we can use Online KYC.

Analytics also enables customer segmentation and productive profiling for various business purposes, including compliance and marketing. For example, compliance teams could use customer profiles for risk assessments or investigations. Likewise, enterprises or marketing teams could use this data to create personalized banking offers based on customer preferences.

Effective Sanctions Screening

The performance of screening engines is under pressure due to rapidly altering and increasing regulatory demand. Unfortunately, this is accompanied by the fact that the risk detection capacity of existing systems is unable to keep up. As a result, a typical symptom of inefficient screening is an ever-growing backlog of screening alerts and unsustainable levels of false positives, directly impacting operational costs.

At the core of effective screening, the solution is an uplift of the completeness and the screening engine ingesting the data’s accuracy. Therefore, calibrating the matching and filtering performance of this effective screening engine needs the data to be of high quality, complete, and ultimately resulting in a boost in true positives detection rates and operational efficiency.

In addition to ensuring the screening, the engine is fully operating at peak performance; emerging AI and other analytical assistive options can also be used to address operational efficiency issues related to a particular case investigation.

Machine learning techniques can be combined with predictive calculations based on historical investigator decisions to substantially reduce the number of alerts to be safely dispositioned. In addition, the effort and cost involved are reduced by building processes that result in complete and accurate data and properly optimizing the engine to avoid false positives.

An intelligence-led and data-driven Fight In The Fintech Industry

Financial companies are being challenged internally and externally to keep up with the onerous demands of mitigating financial crime risks. Organizations are finding innovative ways to address issues surrounding SMR conversion rates, KYC due diligence, and screening alert management.

Banks have an increased appetite to go beyond simply flagging suspicious and illegal activities for compliance purposes. The aim is to leverage data and effective technology to cost-effectively identify potential criminal behavior and prevent illegal activities from occurring. Complete and accurate data is vital to resolve these issues, and the uplift of data quality will immediately affect the existing monitoring and screening engines’ performance.

Conclusion

Advanced analytics, such as AI, machine learning, and automation, can help filter out false positives and improve inefficiencies in existing investigative processes. As a result, there are many opportunities for data and analytics to drive efficiencies and operational cost reductions and, more importantly, to identify intelligence-led and data-driven ways to tackle financial crime.

For all of this, you need the best resources you can get. We at Signzy identify your needs and help you forge the solutions using our AI-driven API resources, which are completely customizable. Check out our website to learn more.

About Signzy

Signzy is a market-leading platform that is redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering totally customizable workflows. It gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru, and it has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

AML and Blockchain – Towards Safer Transactions

Money Laundering refers to the process by which financial transactions are conducted in a way that obscures the link between the funds and the origin. Did you know that money laundering makes up 2-5% of the global GDP, i.e. about 2 trillion? Despite all the measures, compliances, and checks, the increasing rate of financial crimes is proving to be a major roadblock for banks and other financial institutions, thus exposing the loopholes in the traditional financial ecosystem. Being in the business world, you need to be extra careful of these inadequacies so as to avoid any risks. And that’s why, Anti-money Laundering (AML) is the need of the hour for the identification of the customers, tracking, and preventing such crimes. 

AML is the set of laws or regulations made to prevent financial crimes and produce incomes through illegal activities. In today’s digital era, with the evolving complexity and volume of financial transactions, the current state of AML is unable to keep pace with it and track laundering activities happening around the financial ecosystem.

Use of Blockchain

The decentralized system of blockchain technology has proved to be a boon for effectively running cryptocurrencies and covering numerous use cases across businesses and industries.  Blockchain acts as an extremely secure platform to record and store data and information related to AML & KYC compliance. Blockchain-enabled platforms streamline AML/KYC processes on a decentralized ledger. Know Your Customer or KYC plays a significant role in AML as it assesses your business risks and complies with AML laws. 

Industry Challenges

Like every other market sector, even the anti-financial crime departments at most organizations lacked effective monitoring systems and risk-based frameworks during the pandemic era. Major challenges obstructing the AML compliance are as follows: 

 

Facts and Figures on Crimes that Happened in this Industry

Cases of money laundering are not new for any industry. Despite that, more than 57% of the Virtual Asset Service Providers (VASPs) approved by the Financial Action Task Force (FATF) still have weak, porous anti-money laundering measures. This basically means that their KYC processes and AML software are not at par with the security standards. In the year 2017, the global anti-money laundering software market stood at a whopping $879.0 million and now, it is projected to reach $2,717.0 million by 2025.

 

Impact of Blockchain on AML

Initially, a customer would be required to create a block that will consist of all of this data and information. These details are then encrypted and the customer will be provided with a digital passkey to see the data. This public blockchain ledger can further supervise, validate, and record every transaction’s complete history, wherein the readers and crypto miners get immediate notifications of transactions as they occur. In case, if one of the transactions gets unverified, it gets blocked immediately, thus preventing any further loss. Blockchain thereby doesn’t just monitor the entry and exit points of such transactions but also provides overall system analysis and reporting mechanism.

Case Study

In the year 2018, Netherlands‘ largest bank ING Group was fined $900 million for failing to spot money laundering. ING had violated laws in preventing money laundering and financing terrorism for years by not vetting the owners of client accounts and not tracking and analyzing the unusual transactions carried out through them. This came after January 2018 saw Citibank being fined $70 million for the shortcomings in its anti-money laundering policies. The reason behind this penalty was non-compliance with OCC’s 2012 order, due to which the bank failed to complete corrective actions to address AML compliance issues as required.  

How does Signzy Position Itself as a Tech Thought Leader and How Have We Adopted a Change to Make the System?

You can make use of reliable blockchain platforms to mitigate the risks caused due to shortcomings in AML regulations and delayed KYC due diligence. Procedures like AML and KYC can be effectively managed through the digital onboarding by Signzy. With customizable APIs and digital tools, Signzy assists you to conduct safe and compliant AML, KYC, and other requirements. 

Don’t wait for the mishap to happen. Connect with Signzy today, and ensure secured financial transactions. 

About Signzy 

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Digitizing The Digitized- How Can KYC Secure Cryptocurrency Transactions?

With an expected growth projection of nearly USD 24 billion for the blockchain market by 2023, the industry is all set to an exponential start this decade. The terms blockchain and cryptocurrency have had a symbiotic evolution. This has rendered them nearly interchangeable in usage. Nonetheless, we must understand what exactly cryptocurrencies are to understand it’s challenging.

Cryptocurrencies are digital currencies with purchasing and selling value. They use an online ledger and cryptography for secure transactions. With over 10,000 types, they are proliferating in many exchanges and have an estimated total value of more than USD 1.7 trillion as of June 2021.

They use blockchain technology eponymously. This makes them the most modern embodiment of economic advancement. Considering the potential cryptocurrencies have in terraforming the global economy, understanding the associated challenges and improving upon them is essential.

Challenges In The World of Cryptocurrencies

There is an increasing preference for cryptocurrencies in global transactions. The primary reason is the minimal involvement of bureaucracy. A more decentralized approach to monetary interactions also helps. But this can be useful as well as risky. The major challenges are faced during onboarding and include:

  • Financial Fraud
  • Money Laundering
  • Terrorist Funding
  • Government Regulations

Fraud, Laundering, and Terrorist Funding

Cryptocurrencies are used worldwide. Their regulations are different and oftentimes vague than state-issued currencies. Fraudsters are keen on utilizing this as a loophole. It helps them conduct illegal and fraudulent transactions. Cryptocurrencies can be used for money laundering and in some severe cases even terrorist funding. This is a dangerous aspect and regulating such activities requires a careful approach. 

Fraudsters may use false identities, stolen identities, or even shell entities. They transfer money in the form of cryptocurrencies from one international government jurisdiction to another. If not regulated, the entire industry can become a plethora of financial fraud and danger.

Government Regulations

To prevent fraud, cryptocurrencies are traded with stringent guidelines from many governments and authorities. These strict restrictions can severely impede the ease and speed of onboarding customers. It will also increase the minimum activation requirement alienating potential customers and traders.

Cryptocurrency Exchanges require government-issued identification verification along with good financial credibility for their customers. This makes the initial onboarding process heavily cumbersome. If better methods are not explored, the result would be wasted potential clients for the Exchanges.

Verification and KYC

Novel methods are developed to combat financial fraud in cryptocurrency markets. These methods can reduce any money laundering activities and prevent fraudsters from misusing the resources. Brokers consider ways to reduce the risk involved in onboarding a new customer or trader. Methods to verify an individual while avoiding any financial fraud is given below:

  • KYC- Know Your Customer
  • AML- Anti Money Laundering Measures

KYC

KYC helps establish credibility for the customer. This is done by checking their valid identity proofs and other background data. With advancing technology, it is mostly digital. For an industry using blockchain technology, it is only sensible to have efficient digitization of this entire process. Quality digital KYC helps stop all fraudulent or fake individuals from transacting. Thus, the danger is averted and risk is reduced.

AML Measures

Government agencies place Anti-Money Laundering Measures to prevent any form of financial fraud. Many countries might not have specific guidelines for cryptocurrency regulation. But many a time they fall under stringent AML measures. AML is mandatory to prevent any form of massive money laundering. If not complied properly, today’s resources can be used even for terrorist financing. As a matter of fact, measures for CFT-combatting finance of terrorism is a priority criterion for many institutions.

How Signzy Can Help You?

The advent of technology is making cryptocurrencies create a revolution in the industry. This makes it all the more needed to identify and verify the participants in the industry. Procedures like KYC and AML will only be effective if the appropriate guidelines are followed. Along with which safety measures need to be imposed. Nations are heading forward with this in mind.

But the catch is that, how do you fulfill all the criteria of regulations and safety while maintaining an easy journey for each customer? This is what we excel at.

We at Signzy give you customizable APIs and other resources that help you conduct safe and compliant KYC, AML, and all other requirements you have. We will help you onboard customers and traders of cryptocurrencies onto your platforms with ease and safety. Our seamless UI will make the journey all the more engaging. With the numerous products, services, and resources in our arsenal, we can make your enterprise better.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

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