Globex Adds Ethereum Wallet Forensics to AML Screening Solution

By Vanessa Malone

This week, we announced the launch of a new Ethereum wallet forensics feature which was added to our anti-money laundering “AML” software solution, AMLCop. The new feature enables AMLCop to continually screen Ethereum wallets against a database of wallet addresses directly or indirectly involved in phishing, hacks, or scams.

This offers ERC-20 issuers and all companies accepting the Ether cryptocurrency an enhanced AML compliance solution to protect against money laundering and other illicit transactions.

In this week’s blog we want to share more about why we built it, how it works, and how it enhances current AML solutions.

Why we built it

AML has primarily been viewed as a tedious “check-the-box” exercise to keep regulators happy, but increased risk for money laundering and terrorist financing is bringing AML to the forefront.

In the U.S., both FINRA and the SEC’s Office of Compliance Inspections and Examinations (OCIE) labeled AML compliance as a high priority for 2019. Globally, the FATF, an inter-governmental body which provides guidance on regulatory reform to combat money laundering and terrorism financing, came out with new rules which apply to all businesses transacting on the blockchain as well as cryptocurrency exchanges.

The issue — the proposed AML policies expand beyond the standard information the majority of blockchain exchanges currently collect.

What all of this regulatory attention points to is the fact that it’s in a companies best interest to take a proactive approach and enhance or re-think their AML compliance efforts.

How AMLCop’s new feature works

Initially, AMLCop continually verified user details against a proprietary database of global sanctions, Politically Exposed Persons (PEPs), and watchlists.

Now, user search criteria will include Ethereum addresses associated with hacking or phishing updated daily from sites such as Etherscan, GitHub, and CryptoScamDB, which combined amounts to more than 12,000 wallets to date.

Individual wallets are categorized as green for no match, yellow for wallets which have indirectly interacted with a bad wallet, and red for a wallet that has directly been involved in scam or phishing scandal.

Through our hosted web portal, compliance officers will be able to view, clear, escalate, and seamlessly manage flagged individuals. Because AMLCop is linked to the Ethereum blockchain, timestamped records of when an individual was cleared and by who is immutably stored on the Ethereum public blockchain for increased transparency and detailed record keeping.

How it enhances current AML solutions

The focus current AML solutions seem to have is to weed bad actors out during the onboarding process, which is an imperative step in any AML compliance program. But for a comprehensive AML compliance plan, we don’t believe it should stop there.

Say you’re a digital securities issuer. You ensure that every investor being onboarded was thoroughly checked and wasn’t involved in any money laundering, terror finances, or other illicit schemes. Great!

Then, after the allotted holding period, your digital securities are trading on a regulated exchange and one of your investors decides to enter into a money laundering scheme. Then what?

This is precisely why we wanted to offer the community a solution that doesn’t only work to keep bad actors from entering your company or deal at the beginning. We developed a method to keep bad actors out from issuance through secondary trading and beyond.

The result — a clean cap table through the entire lifecycle of your digital securities. We believe this has major implications for blockchain companies and exchanges, as the ability to maintain a fair, transparent and safe marketplace is critical to attracting and sustaining liquidity. To schedule a demo, please visit amlcop.com.

Additional notes on AMLCop

AMLCop is partnered with the National Investment Banking Association (NIBA) offering its AML solution to NIBA members and broker-dealers. This announcement expands the product’s reach to all companies and issuers working with ERC-20 Ethereum digital securities who wish to enhance due diligence and AML efforts. AMLCop integrates with KYCware, Globex’s user onboarding app for a comprehensive know your customer and anti-money laundering compliance solution.

A few words on the new feature from our Executive Team:

“With regulatory pressure in the U.S. and a new global standard for AML presented by the FATF, compliance can no longer take a backseat,” says Globex CEO Brian Collins. “We are thrilled to provide our clients with new and relevant search criteria to enhance AML efforts and protect market participants from bad actors.”

“Through AMLCop’s hosted web portal, companies can run unlimited checks, and re-checks against the database, manage flagged individuals, and maintain timestamped reports of all AML verifications on the Ethereum public blockchain,” says Globex President Mark Elenowitz. “Adding Ethereum wallet monitoring continues our vision of providing the blockchain and financial community with a true one-stop solution for blockchain compliance.