As a financial company and a registered Money Services Business (MSB) with FINTRAC, CoinSmart is required to follow a certain standard of Anti-Money Laundering (AML) compliance.
A big concern with cryptocurrency, is the challenge of tracking where it comes from and what types of funds it has interacted with. It can be difficult to verify the AML nature of such funds. This is why CoinSmart has chosen to employ a revolutionary tool like Chainalysis, which allows us to do just that.
What is Chainalysis?
Chainalysis is a big data analytics software that is able to cluster wallet addresses in terms of risk categories. This includes things like "Gambling", "Dark Net", "Exchange", etc.
How do we use Chainalysis?
All transactions entering our exchange are vetted by this software and the risk level of the funds is assessed on the go. If the funds were mixed in a high risk or illegal environment online, then the transaction will be flagged for review and our compliance team will take a deeper look into it.
Our compliance team then uses another Chainalysis tool to evaluate the individual transactions related to the funds, as well as the risk exposure of the wallets involved.
What happens if my transaction is flagged?
If a transaction has been flagged, our compliance team will assess the risk exposure of the individual wallets involved. Most transactions are cleared in this phase and completed as requested. While rare, if the transaction is deemed to be too high risk for the exchange, the client will immediately be notified, and the transaction will be reversed to the original wallet.