In a letter published on Thursday, the New York State Department of Financial Services, or NYDFS, recommended that all virtual currency companies operating under New York banking law adopt blockchain analytics to trace transactions. In supporting the decision, the regulatory agency wrote:
Therefore, as told by NYDFS, it is vital that such class of firms use blockchain analytics to prevent illicit transactions, such as money laundering or terrorism financing. The agency also outlined three analytical processes that can help combat such measures. These include augmenting Know Your Customer, or KYC, related controls, conducting transaction monitoring of on-chain activity, and conducting sanctions screening of on-chain activity.
- Automating real-time transaction monitoring for millions of transactions by generating risk scores for addresses.
- Receiving alerts to enable proactive risk management if there are changes to risk profiles.
- Easily configuring rule engines and unique risk insights into existing third-party case management tools.
- Screening transactions for anti-terror financing and other AML-related flags at scale.
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