Written by Rob Tharle, Head of Product  

We’ve seen before UK banks restricting the amount of crypto, either in part or in full, they allow customers to buy or transfer especially via cards.  Recently multiple UK banks  updated their policy to restrict crypto payments even further.  And this is not just the case for customer transfers, but also their own fiat banking requirements. This isn’t just happening in the UK either.  

With the winding down of Silvergate Bank in the US, and other moves,  we see firms struggling to get USD on and off ramps in place, as well as in Europe too and the SVB fallout is unlikely to help. 

There are a number of reasons for this: 

• High levels of fraud and money laundering associated with crypto 
• Explicit instructions from regulators to stop payments with certain firms 
• A desire from banks to keep away from higher risk transactions in order to protect customers from fraud and themselves from AML fines and prosecution 

With many countries putting in place regulations to govern various elements for crypto, and in many cases starting to enforce existing money laundering and other regulations, now is the time for crypto firms to become fully regulated financial service firms. The EU and UK amongst others are in the process of doing this with MICA and the recent Treasury consultation.  

If firms can clearly demonstrate that they are implementing similar levels of controls to tradfi then, it becomes harder for banks to take blanket restrictive policies, rather than risk based assessment by firm and transaction. 

So how do crypto firms achieve this? 

Money Laundering regulations, both KYC and Ongoing Due Diligence, transaction monitoring, the new Crypto Travel Rule and in the UK Duty of Care for firms related to e-money are all relevant. 

This breaks down then to the following sorts of activities:

• Improved onboarding processes, perverting opening accounts for known or potential mules and fake firms 

• Identifying wallets and customer accounts that look high risk of mule behaviour e.g. sudden high turnover, change in digital access profiles etc. 
• Helping protect their customer from fraud and scams through: 
• Better controls to accounts including MFA, alerts etc. 
• Checking against known bad addresses and persona data and also fiat accounts at the on and off ramps when making transactions and blocking or alerting where appropriate 
• Helping victims of fraud and scam more by allowing them to quickly and easily report to beneficiary exchanges, banks and law enforcement  

• Freezing and repatriating funds where there is good reason too, along with a fast response to law enforcement requests 
• Help victims get their funds back, thereby reducing illicit funds reaching organised crime groups 
• Investing in investigations tools that provide: 
• Crypto intelligence for tracing and labelling 
• Known Mule accounts/wallets and their related persona details 

• Omnibus account/wallets with high fraud rates 
• Alerts on accounts/wallets/customers that have been used in or connected with fraud and scams 

By taking these sorts of approaches, engaging and welcoming regulations, will help encourage more users to your platform and provide tradfi with the confidence to allow payments and/or fiat banking services. 

About CYBERA 

At CYBERA we’re on a mission to stop money laundering and help protect customers from scams and other financial cybercrime. We close gaps that allow cyber criminals to thrive by sharing crime data in real-time with crypto exchanges financial institutions and fintechs, coordinating a global response to support customers who have become victims of financial cybercrime. 

CYBERCRIME WATCHLIST^TM helps support firms to reduce fraud and money laundering and meet regulatory requirements as part of a holistic fraud and financial crime strategy. 

CYBERCRIME VSR^TM lets victims quickly and easily report fraud and scams to beneficiary institutions and law enforcement to increase chances of recovery.