Anti-money laundering in the cryptocurrency market (AML)

Published 13 October 2021
Anti-money laundering in the cryptocurrency market (AML)


It may seem that the world of cryptocurrencies promises some utopian conditions of anonymity and the absence of regulation. The situation changes as soon as the abbreviations AML (Anti-money laundering) and KYC (Know Your Customer) appear on the horizon. They may frighten off the users and push them to choose a platform with a simpler policy. In this article, we will explain what the AML procedure is and why it is helpful for users in the first place.

What is AML?

AML is a set of measures and laws aimed to prevent illegal activities in the financial sector, specifically — money laundering.

Verifying a user’s identity and the crypto address is the basic but very efficient way to confirm that the user’s assets have not been involved in fraudulent schemes and do not pose a threat to other users and the exchange. Both KYC and AML protect users in the first place. The presence of these tools on the platform suggests that the exchange cares both about the safety of its users and about its own reputation. If you choose a platform with no KYC and AML, you should be prepared that such an exchange will not be responsible for situations where your assets and personal data may suffer.

How to check cryptocurrencies?

To verify the address of a crypto wallet is a great way to secure your assets. What are the prerequisites for a successful cryptocurrency verification? Let’s take a look at Bitcoin as an example.

  1. You cannot delete any information from the blockchain.
  2. Everyone can track the information about the transaction thanks to the unique transaction address.
  3. Bitcoin is made up of smaller parts, and their history can also be traced.

These features help to track the movement of an asset using an analytical algorithm. Even though it is difficult to trace an individual through a crypto-address immediately, it is still possible if the address is used more than once. The exchange may have indicated the wallet’s address on its website, or the user may have passed KYC. All this information is recorded in private and public databases, which are checked by the algorithm. The algorithm “marks” the address with the following tags:

  • darknet service;
  • gambling;
  • illegal service;
  • risky exchange;
  • scam, etc.

Even if an individual uses different addresses, the algorithm assigns tags and starts tracking all associated addresses and operations.

This verification principle underlies AML programs that score the blockchain and determine the relationship of an asset to illegal tags.

How to check addresses on WhiteBIT?

Before making a transaction, you can check the counterparty address using a special tool.

  1. Select the AML tab in the Services section in the upper menu of the exchange.
  2. Choose the currency you want to check.
  3. Enter the address and click “Check”.

Ready! The algorithm is already checking the address you are interested in. Pay attention to the risk signals and the risk score. They will show you the tags to watch out for, as well as the risk percentage.


AML program makes it possible to check crypto addresses for illegal activity. It helps both the users and large exchanges to avoid dirty assets and protect their reputation and funds.