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An approach to anti-money laundering compliance for cryptoassets

Author

Listed:
  • Iñaki Aldasoro
  • Jon Frost
  • Sang Hyuk Lim
  • Fernando Perez-Cruz
  • Hyun Song Shin

Abstract

Existing anti-money laundering (AML) approaches relying on trusted intermediaries have limited effectiveness with decentralised record-keeping in permissionless public blockchains. The public transaction history on blockchains can enable AML and other compliance efforts, such as FX regulations, by leveraging the provenance and history of any particular unit or balance of a cryptoasset, including stablecoins. An AML compliance score based on the likelihood that a particular cryptoasset unit or balance is linked with illicit activity may be referenced at points of contact with the banking system ("off-ramps"), preventing inflows of the proceeds of illicit activity and supporting a culture of "duty of care" among crypto market participants.

Suggested Citation

  • Iñaki Aldasoro & Jon Frost & Sang Hyuk Lim & Fernando Perez-Cruz & Hyun Song Shin, 2025. "An approach to anti-money laundering compliance for cryptoassets," BIS Bulletins 111, Bank for International Settlements.
    • Handle: RePEc:bis:bisblt:111
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    References listed on IDEAS

    as
    1. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
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