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How confident are bankers about detecting crypto-related payments?

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Only 22% of bankers and financial investigators feel confident detecting crypto-related payments, according to blockchain analytics and cryptocurrency intelligence company – CipherTrace.

During a webinar on “How Cryptocurrency Intelligence Tipped the Scales in 2020 Sanctions Evasion,” over 500 attendees from various financial institutions were asked if they felt confident detecting cryptocurrency-related payments flowing through their institutions and/or investigations.

Source: CipherTrace

However, less than a quarter of the respondents expressed confidence in detecting crypto-related payments. Here, it should be noted that this is an issue that’s been around for a while. In fact, over a year ago, CipherTrace itself had launched a crypto-risk intelligence product for its banking clientele.

Right now, around $2 billion in crypto-related transactions move annually on the payment networks of a typical top-10 U.S bank and eight out of ten of them unknowingly harbor illicit crypto-MSBs. In fact, some reports suggest that over 90% of actual cryptocurrency-related transactions within a financial institution might not even be detected.

What then? Well, the obvious next steps include the ramping up of efforts to better the effectiveness of AML programs within banks. As confirmed by Cipher Trace, in 2021, bank examiners and FinCEN (Financial Crimes Enforcement Network) will focus on virtual currency exposure when assessing the effectiveness of bank (anti-money laundering) AML programs.

Going forward, financial institutions should be able to identify institutional and peer-to-peer virtual currency-related transactions and understand how their institutions interact with emerging virtual asset service providers (VASPs).

In fact, earlier this year, FinCEN Director Kenneth Blanco had addressed the risks associated with virtual currencies by commenting,

“These risks are not unique to money services businesses or virtual currency exchangers; banks must be thinking about their crypto exposure as well. These are areas your examiners, and FinCEN, will ask you about when assessing the effectiveness of your AML program.”

FinCEN also proposed a rule change this October, one that lowered the threshold for Travel Rule information sharing and retention from $3,000 to $250 for all cross-border payments involving U.S financial institutions.


Samyuktha is a full-time journalist at AMBCrypto. Currently pursuing her Masters in Finance and Business Analytics, she is interested in cryptocurrencies, fintech, and blockchain technology adoption across various sectors.
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