The CipherTrace Compliance Monitoring solution continuously rates the risks of cryptocurrency businesses to protect consumers, investors and business partners, the company says. CipherTrace is a supervisory technology (suptech) tool which, through the cryptocurrency anti-money laundering, cryptocurrency forensics, and blockchain threat intelligence solutions it offers, will enable MFSA to manage the risk associated with virtual asset businesses.

“Being strongly aware of the money laundering and financing of terrorism risks associated with entities operating in this sphere, the decision has been taken to engage the services of CipherTrace in order to reduce fraud and detect transactions with illegal sources of funds. CipherTrace Compliance Monitoring will provide the MFSA with powerful oversight tools to automate regulatory processes and audit the risk management of virtual asset businesses that are licensed in Malta,” said MFSA Chief Executive Officer, Joseph Cuschieri.

CipherTrace Compliance Monitoring uses machine learning to de-anonymise transactions, which helps regulators evaluate and monitor the trustworthiness of virtual asset businesses. This solution tracks the risk exposure of virtual asset businesses including cryptocurrency exchanges, collective investment schemes and initial coin offerings (ICOs) to gauge and measure potential exposure. “This suptech will allow the MFSA to monitor the activities of crypto businesses both pre- as well as post-authorisation stage,” said Dave Jevans, CEO CipherTrace.

“Cryptocurrency businesses often have difficulty establishing trust and maintaining banking relationships because of their perceived risk. Banks and other financial institutions use the CipherTrace Compliance Monitoring solution to help decide which virtual asset businesses to trust as corporate customers. These insights help banks avoid de-risking by turning away valuable customers in this lucrative and fast-growing sector,” added Mr Jevans.

CipherTrace’s machine learning algorithms calculate risk levels for exchanges, addresses, wallets and other entities based on known associations, criminal addresses, and money laundering services. CipherTrace also profiles hundreds of global exchanges, dark markets, mixers, gambling services, high-yield investment products, and ATMs to determine risk levels of transactions based on activity related to suspicious addresses and wallets.

Regulator MFSA covers banks, insurance companies, investment services, trusts and pensions in Malta. As of last year, the MFSA became the first European regulator to develop a framework to regulate virtual financial assets. The MFSA’s mission, as enshrined in its Vision 2021, is to enhance its position as an independent, proactive and trustworthy supervisory authority with the main purpose of safeguarding the integrity of markets and maintaining stability within the financial sector, for the benefit and protection of consumers. Over 2,300 entities are licensed by the MFSA to operate in the financial services sector, which makes up 11% of the Maltese GDP.

The post CipherTrace gives crypto monitoring tool to MFSA first appeared on The Malta Business Weekly.

The most common criminal activity last year comprise of theft from cryptocurrency exchanges. Hackers stole more than $950m (€840m+), a 3.6 times growth as compared to 2017, the report finds.

Users and investors also fell for fraudulent ICOs, phoney exchange hacks, and Ponzi schemes in 2018, losing at least $725m (€640m+) in cryptocurrency. “A cryptocurrency exit scam is a confidence game where the promoters of a cryptocurrency ICO or other venture fails to execute — or executives of exchanges say they cannot return users’ assets — and then abscond with the money. This finding indicates that a new breed of cybercriminals is shifting their techniques from hacking to insider jobs,” the press release announcing the report says.

Despite the downturn in the prices of many cryptocurrencies, the total American dollar value of falsified tokens was higher in 2018 than the preceding year. According to the report, this talks of the sophistication of cybercriminals, as well as the increasing need for better online security.

The report also compiles the coming wave of global regulatory enforcement and emerging money laundering schemes “By 2020 most modern economies — including the US, EU and G20 as well as Gibraltar, Bermuda and Malta — will have deployed strict cryptocurrency AML and Know Your Customer (KYC) regulations,” the press statement says. However, the report notes that cryptocurrency laundering activities can bypass these regulations by obscuring the source of funds with new and innovative money mixers, unregulated crypto-to-exchanges, and privacy coins.

“Cryptocurrency criminal activity continues to evolve and accelerate. Fortunately, pending global legislation will hamstring many criminals, global gangs, and terrorist groups by greatly reducing their opportunities to launder,” says Dave Jevans, CEO of CipherTrace and co-chair of the Cryptocurrency Working Group at the APWG.org. “These tough new laws will drive bad actors to not only innovate but also flock to jurisdictions with weak regulatory oversight, as we have shown in earlier research. CipherTrace’s blockchain intelligence and anti-money laundering technology helps exchanges, financial services firms, regulators, and law enforcement work together to create trust in the crypto ecosystem,” he adds.

CipherTrace develops cryptocurrency anti-money laundering, cryptocurrency forensics, and blockchain threat intelligence solutions. Its CipherTrace Cryptocurrency Anti-Money Laundering Report is published quarterly. CipherTrace was founded in 2015 by Silicon Valley entrepreneurs involved in cybersecurity, eCrime, payments, banking, encryption, and virtual currencies. The US Department of Homeland Security Science and Technology (S&T) and DARPA initially funded CipherTrace, and it is backed by leading Silicon Valley venture capital investors.

The post Crypto scams, theft increase in 2018, says AML report first appeared on The Malta Business Weekly.