The Binance cryptocurrency exchange has teamed up with Chainalysis to combat the use of cryptocurrencies to launder money.
The partnership is strategic especially since Chainalysis cryptocurrency investigation and compliance solutions. Binance is currently the largest cryptocurrency exchange in the world based on trading volume. The two will work together to tackle some of the cryptocurrency-related concerns by traditional financial institutions and regulators.
Partnership of Chainalysis and Binance to fight against Global Cryptocurrency Money Laundering!@chainalysis‘ tie-up with @binance to improve its detection of suspicious transactions.https://t.co/jge2RPgBHx#CryptonewsZ #Cryptocurrency #Binance #Chainalysis #CryptoExchange
? CryptoNewsZ (@cryptonewszcom) October 18, 2018
Criminals have been using cryptocurrencies to move money
Money laundering through cryptocurrency is a major issue that has painted a dull picture on the digital currency market. Europol head, Rob Wainwright claims that roughly 3 percent to 4 percent of European criminal proceeds were laundered through digital currencies. This means criminals in the European region shifted between $4.2billion to $5.6 billiona each year through digital currencies.
?Cryptocurrency businesses of all sizes face the same core challenge: earning the trust of regulators, financial institutions and users,? stated Chainalysis co-founder, Jonathan Levin.
The American Drug Enforcement Administration (DEA) reported that international criminal groups have been using cryptocurrencies to clean their dirty money. Binance developed a compliance solution that may help solve some of the money laundering issues.
Solutions aimed at improving the situation
Levin also added that his company expects blockchain and cryptocurrency firms to emulate Binance by creating AML compliance programs that will be up to regulatory requirements. Chainalysis has a compliance software called Chainalysis KYT (Know Your Transaction). It is currently the only software that can monitor cryptocurrency transactions in real-time.
The Chainalysis KYT software uses dedicated complex algorithms and pattern recognition to evaluate the flow of transactions and identify any threats. Binance CFO Wei Zhou stated that the partnership between his company and Chainalysis will allow them to keep working on a compliance program that will facilitate the next growth stage.
The developments have been in the pipeline for the better part of this year. For example, Chainalysis acquired $16 million through a Series A funding. The funding round was led by Benchmark and the raised amount was supposed to be used to roll out the Chainalysis KYT and also expand cryptocurrency coverage.