Best AML Software - Comparison for Crypto Businesses

Konrad Rotkiewicz
25 November 2020 · 8 min read

Money laundering is a grave concern for regulators and law enforcement agencies worldwide. According to a United Nations report, the total money laundered every year equals anywhere between 2% to 5% of the global GDP, amounting to trillions of dollars.

Due to the money-like nature of cryptocurrencies, they too have become a common tool for effectively laundering money beyond borders. Given that they are borderless and anonymous, it is even harder to trace funds laundered using cryptocurrencies. This has created a demand for special solutions to:

  • prevent financial crimes and ease fraud detection
  • provide advanced identity verification
  • provide screening and transaction monitoring
  • help businesses with risk management

Anti-money laundering solution is used by financial institutions, law enforcement agencies, and the government to detect any suspicious activity and illegitimate transactions.

In the article we will compare best AML software for crypto businesses and show their distinctive features.

What is crypto AML software?

Cryptocurrencies are digital assets like nothing the world has ever seen before. Their foundation is laid on top of a distributed and decentralized ledger called a blockchain. No central entity can control or restrict how blockchains function and the cryptocurrency transactions that take place on them.

Most legacy systems built to prevent money laundering using traditional money are rendered useless as they’re not built for systems where transactions cannot be controlled or identified. To deal with cryptocurrency money laundering, we need special platforms.

AML software definition

Anti money laundering (AML) software is a special platform that is well-equipped with technologically advanced tools to track and trace transactions in a decentralized ecosystem.

Cryptocurrency companies today prioritize using AML tools provided by AML platforms as lawmakers are becoming more strict regarding the law compliance of the crypto industry. It lies in the best interest of the companies, the users, and the lawmakers that cryptocurrency companies utilize AML software and tools from the very beginning.

Sooner or later, the regulators will enforce AML laws on all crypto companies. If companies are compliant with these laws from the beginning, they may easily avoid significant technical debt, which is the extra cost of restructuring the existing platform at a later stage to make amends that should have been a part of the platform since the start.

Importance of anti-money laundering software for crypto exchanges

The cryptocurrency industry is now strictly under the radar of regulators worldwide. Recently, the founders of the two most widely used cryptocurrency trading platforms, BitMEX and OKEx, were indicted and arrested for their inability in AML compliance. If lawmakers can press charges against owners of such widely popular exchanges, there’s no reason to think that new and smaller exchange platforms can escape the lawmakers upon failing to comply with legal requirements. However, beyond protecting yourself, your company, and your platform from facing such a fate, here are other reasons why you should consider using AML software and tools for your cryptocurrency exchange:

  • Track and trace exchange activity more effectively

    Not using AML tools for compliance is like leaving your users at their own discretion, even if they’re up to something illegal. As an exchange platform, it is your company’s responsibility to detect suspicious activity, take care of fraud management and promote legal exchange.

  • Build trust in your platform and digital currencies

    The cryptocurrency industry is still condemned by many even though traditional money is far more widely used for illegal purposes compared to cryptos. Using anti money laundering software to comply with regulations will help build trust in your platform as well as the industry as a whole.

  • Help regulators fight money laundering

    Irrespective of how hard you try, there may be some users using your platform for some suspicious activity. In that case, if your platform uses AML solution, you can easily report suspicious activities to law enforcement agencies and help them track down people involved in them.

Why do you need AML software? - Ulam Labs
Why do you need AML software? - Ulam Labs

What are the features of AML software?

A Coinfirm representative explained to us the number of factors companies must consider when choosing the right AML solutions. These include:

  • The number of risk indicators used to assess the risks — the more the better.
  • Percentage coverage of cryptocurrencies monitored — should be full or nearly full
  • The number of blockchain entities actively monitored by the AML provider
  • Experience in offering AML services and the number of past clients
  • Complimentary services such as safety of digital assets’ transaction

Best anti-money laundering software - comparison

There are numerous platforms for AML compliance available in the market. As a cryptocurrency company, you should prefer using a crypto-specific platform that has tools specifically built for blockchain and cryptocurrencies. To help you decide the best crypto AML solutions, we have listed down five of the best service providers in the industry.

Coinfirm

Coinfirm is a London-based blockchain analytics company that advises regulators on how to combat cryptocurrency crimes. It also enables financial institutions to follow regulatory compliance guidelines such as the FATF’s Travel Rule and AMLD5.

Its new service called “Reclaim Crypto” intends to help crypto hack and scam victims reclaim their stolen cryptocurrencies. “Reclaim Fork” is another brand new tool which allows crypto investors to reclaim their forked tokens in a quick, simple and secure way.

Best AML software: Coinfirm - Ulam Lab
Best AML software: Coinfirm - Ulam Lab

The most striking features of Coinfirm:

  • Monitors and tracks data of more than 10,000 blockchain entities and 1,400+ cryptocurrencies. The company claims to have one of the largest blockchain-related databases that helps them make accurate decisions - which makes Coinfirm’s AML Platform probably the most complete evaluation solution on the market.
  • Allows customers to track crypto transactions, wallets as well as high-risk crypto wallet addresses to pin down illicit activities. It also helps recover and refund stolen cryptocurrencies to users’ wallets.
  • Provides customers with almost instant risk reports of 270 risk checks and data points.
  • Over 200 clients worldwide already trusted Coinfirm, including top crypto exchanges, banks, crypto services and others.
  • Only crypto AML/KYC analysis company to cater to DeFi compliance through the AMLT Oracle.

Chainalysis

Founded two years prior to Coinfirm, in 2013, Chainalysis is another well-known name in the blockchain analysis and cryptocurrency AML sector. It builds exclusive software for cryptocurrency companies to comply with anti money laundering requirements.

Best AML software: Chinalysis - Ulam Labs
Best AML software: Chinalysis - Ulam Labs

Most prominent crypto AML features for Chainalysis:

  • Conducts investigations covering 85% of cryptocurrency market value and it adds new cryptocurrencies all the time.
  • Allows customers to browse through more than 1,800 services and monitor their activity.
  • Know Your Transaction (KYT) is Chainalysis’s exclusive real-time API that helps determine risks associated with specific cryptocurrency transactions.
  • Exchange platforms can customize the kind of activity they want to prevent and use the Chanalysis software to fit their specific needs.

The biggest strength of Chainalysis is its experience of working with the best in the industry. It has provided its services to government agencies such as Europol and renowned corporate firms such as Barclays and MUFG.

Elliptic

Founded in 2013 with offices in London, Elliptic helps crypto businesses, financial institutions, and regulators to prevent financial crime in crypto. Their blockchain analytics expertise provides accurate, actionable insights that businesses rely on to mitigate risk and be compliant.

Best AML software: Elliptic - Ulam Labs
Best AML software: Elliptic - Ulam Labs

Elliptic’s crypto AML features include:

  • Monitors more than 100 assets covering 97% of all assets and has linked hundreds of millions of crypto asset addresses to known entities including dark markets which are no longer operational.
  • It has accumulated 10 billion data points to generate insights based on configurable risk rules to suit a customer’s risk appetite.
  • A crypto AML compliance API put crypto monitoring and risk scoring on auto-pilot. Elliptic also analyzes transactions before they’re registered on the blockchain.
  • Provides on-site training on crypto asset compliance, regulation, and configuration.
  • Monitors privacy-focused coins such as ZEC and ZEN and has accumulated data on crypto mixers and decentralized exchanges.
  • Claims to have the industry’s first predictive functionality.

CipherTrace

Set up in 2015, CipherTrace claims to be the world’s first blockchain forensics team. It provides AML and financial crime investigation services to cryptocurrency companies and financial institutions. CipherTrace has worked with a wide range of private and government entities to solve crypto-related matters.

CipherTrace - Best AML solution comparison - Ulam Labs
CipherTrace - Best AML solution comparison

CipherTrace’s most noted features:

  • Adds more than 1.5 million attributions every week from more than 1,500 public and private intelligence sources. With the surplus data, CipherTrace is able to predict fraudulent transactions and notify crypto platforms in real-time.
  • Tracks stolen cryptocurrencies and blocks them from being traded on their customers’ exchange platforms.
  • Profiles hundreds of companies including exchanges, gambling services, and ATMs to keep a record of criminal wallet addresses. Using this, the company assesses the risk levels of cryptocurrency platforms.
  • Helps automate transaction risk scoring and reporting. It also provides software to detect transactions using illegal sources of funds for AML compliance.
  • CipherTrace is the fastest in tracing privacy coins like Monero. It claims to be the only firm to offer Monero tracing tools to intelligence agencies and law enforcement. It has filed two foundational Monero tracing patents.

ScoreChain

ScoreChain was also founded in 2015 with the intent to provide compliance services to crypto and blockchain companies. It has since served many crypto companies in the industry.

ScoreChain - Best AML platforms comparison - Ulam Labs
ScoreChain - Best AML platforms comparison - Ulam Labs

Primary features of ScoreChain:

  • Provides origin and destination of funds along with customized risk scoring using more than 300 risk scenarios.
  • Assesses data from more than 15,000 entities and databases. This provides ScoreChain with an immense pool of data to analyze transactions.
  • Possesses a full history of transactions of hundreds of thousands of ERC wallet addresses.

Which anti money laundering software is best for your company?

For the right reasons, anti-money laundering compliance is now gaining more recognition and acceptance in the industry. Measures to comply with AML requirements have become a crucial part of every cryptocurrency company. As regulations become more well-defined, it will be even more pivotal for a crypto company to comply with these laws.

If you need a technology partner to build a regulation-compliant cryptocurrency exchange or a FinTech product, get in touch with us so we can together give shape to your ideas, legally and in a fully compliant manner.

Contact us

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