Your expert in blockchain regulation. A сertified crypto AML specialist & the CEO of AMLBot and AMLSafe.
With the news that January trading volume on decentralized exchanges reached an all-time high (above 55 billion - can you imagine?), unfortunately, an increased risk of money laundering (ML) occurred as well.
While it is true that you can easily pick up a “considerable” trail of dirty money by simply trading, there are some sensible precautions that can be taken to avoid falling foul to bad actors.
Let me start from the beginning and give you some advice on how to keep yourself safe from filthy, dirty coins.
DEXs are blockchain-based peer-to-peer (P2P) online services allowing users to make direct crypto transactions with each other. The ambiguous feature of DEXs is that they don’t require users to pass know-your-customer (KYC). To be fair, it’s both exciting and scary.
On one hand, making a transaction has never been easier before. You create a wallet and start trading within a matter of seconds without disclosing any personal information. Attractive, isn’t it?
But what if you decided to abuse it for money laundering (ML) or terrorist financing (TF) purposes? Or what if you were an honest market player who accidentally ended up receiving dirty coins in the liquidity pool?
Not so attractive anymore …
Let’s outline all the risks occurring due to the lack of anti-money-laundering (AML) compliance.
Users will unwillingly take the high risk of picking up someone else's “dirty” money trail once they decide to withdraw their assets back.
Having a product to run means taking responsibility for the funds that the pool holds. The value of the product is completely demolished once it is not credible for all users. It is especially hard to earn users’ trust when your product doesn’t comply with money laundering and governmental KYC regulation.
There is no way you can classify coins on your own with no external help. Only by keeping the history of each transaction, you will never be able to defend whether you knew the buy or sell was “clean”.
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