Virtual Currency Transactions

Cryptocurrency and crime are increasingly becoming inseparable — and yet, most law enforcement systems around the world are still catching up. Virtual Digital Assets (VDAs) like cryptocurrencies and NFTs pose serious challenges to investigators: pseudonymity, volatility, decentralisation, and complex technological architecture. To meet these challenges head-on, the Centre for Cybercrime Investigation Training & Research (CCITR), CID Karnataka has released a comprehensive manual titled “Investigation of Virtual Digital Assets: A Guide on Cryptocurrency Search, Seizure and Tracing.” This guide lays out the Standard Operating Procedures (SOPs) for safe, lawful, and effective handling of VDAs. It includes step-by-step protocols for setting up controlled wallets, seizing crypto assets, and tracing transactions — all based on real-world case scenarios and investigative needs. In a world where one wrong click can erase millions in assets or taint vital evidence, having a clear, tested SOP isn’t optional — it’s essential. Proud to have contributed to the development of this SOP alongside Manjesh shetty #VirtualAssets #CryptoInvestigation #DigitalForensics #Cybercrime #Cryptocurrency #LawEnforcement #BlockchainInvestigation #DigitalAssets #CCITR #CIDKarnataka #CyberSecurity #CryptoCompliance #SOP #CrimeInvestigation #PublicSafety

Virtual assets are now firmly embedded in the global financial system — and so are their risks. A recent public report from the UAE Financial Intelligence Unit (UAE FIU) provides a detailed analysis of how virtual assets are being misused across a wide range of financial crime typologies, based on several years of STR and SAR data. Some points that stood out to me: Fraud remains the most frequently observed risk, including investment scams, romance fraud, and document forgery Stablecoins feature prominently, particularly in cross-border activity Increasing use of DeFi platforms, P2P transactions, mixers, and cross-chain techniques to obscure transaction trails Ongoing challenges around Travel Rule implementation, data availability, and international coordination What I find particularly valuable in this report is the practical focus on patterns, indicators, and investigative challenges, rather than theory. For compliance teams, FIUs, and supervisors, it’s a useful reference on where attention and resources are increasingly being tested. 📄 I’ve attached the full report for anyone who wants to read it in detail. #AML #CFT #FinancialCrime #Crypto #VirtualAssets #FIU #Compliance #RiskManagement

📜 "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone." 📜 Bitcoin Whitepaper's abstract

🗽Today, New York State Department of Financial Services released new guidance urging banks and other covered financial institutions to leverage blockchain analytics like TRM Labs to manage risk tied to digital assets. The guidance, which builds on DFS’s 2022 guidance on blockchain analytics, is classic DFS - concise and straight to the point - making it clear that blockchain analytics should now be part of the compliance toolkit for any bank with customers transacting in digital assets. So what does that look like in practice? DFS lays out a number of ways institutions should be thinking about deploying these tools: 🔍 Screening wallets of customers who have disclosed or engaged in crypto transactions to assess risk exposure ✅ Verifying sources of incoming funds that originate from VASPs 🌐 Monitoring the broader ecosystem to evaluate customer exposure to money laundering, sanctions, or other crimes 🤝 Identifying and assessing third-party risk, including counterparties of customers 📊 Comparing expected vs. actual behavior (like transaction thresholds) of crypto-active customers 📈 Using intelligence from holistic monitoring to refine risk assessments and risk appetite ⚖️ Evaluating risks for new products or services tied to virtual currency activity DFS is careful to emphasize that these are not one-size-fits-all mandates. Each institution is expected to tailor controls to its own risk profile, business model, and operational footprint — and update them regularly as new technologies, customer types, or counterparties emerge. DFS ends with this: "With increasing virtual currency adoption, Covered Institutions play a critical role in safeguarding the integrity of the financial ecosystem to prevent illicit activities like money laundering, terrorist financing, and sanctions evasion." I agree. 

Virtual assets (VAs) are now integral components of modern financial systems, offering high transaction speeds and broad accessibility. Despite these advantages, VAs present substantial risks because their ecosystems are vulnerable to criminal exploitation - opens the "Misuse of Virtual Assets in Financial Crime" report published at the end of December 2025 by the UAE Financial Intelligence Unit (UAEFIU). The report draws on Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) submitted between July 2023 and June 2025, supported by blockchain tracing, international intelligence exchange, law enforcement case analysis, and engagement with virtual assets service providers (VASPs) and the banking sector. I noted these key findings: 📌 The analysis findings identified #fraud as the most prevalent risk, encompassing investment and Ponzi schemes, employment and task scams, romance fraud, and website mirroring. Many transactions traced by the UAEFIU were linked to fraud shops and scam wallets on the blockchain. 📌 Online #illegal #gambling has emerged as a frequently reported concern among VASPs and the banking sector. Analysis of relevant STRs/SARs indicates that a growing number of UAE residents are using VAs to make payments to online gambling platforms operating outside the UAE. 📌 Analysis of STRs/SARs also revealed varying levels of exposure to high-risk wallets, including those associated with illicit organisations, stolen funds, and darknet markets. Additionally, several subjects of these reports were suspected of engaging in direct or indirect transactions with sanctioned entities (clusters) or proxies of sanctioned jurisdictions by foreign regimes. 📌 In the context of high-risk wallets, analysis of STRs/SARs indicated that VAs were sometimes routed through several intermediaries to wallets labeled as #terrorist fundraising or included on seizure lists, as identified through tracing tools or open-source intelligence. However, these instances occurred less frequently than other typologies described above. 📌 The use of unlicensed VAPs and (crypto) hawala services continues to be observed in the reported STRs/SARs to the UAEFIU. Peer-to-Peer (P2P) transactions were also observed involving individuals using their personal accounts to conduct high-volume crypto trading, either for themselves or on behalf of others. Unlicensed individual brokers may have conducted some of these P2P transactions. 📌 The data analysed in this report also demonstrate a shift toward the use of #stablecoins, particularly USDT on the Tron network, which was the most frequently observed currency in the examined SARs and in responses to the UAEFIU questionnaire. Swapping various cryptocurrencies for stablecoins (USDT and USDC) was common in multiple STRs reviewed.  If you operate in the UEA or have a significant exposure to this jurisdiction this is definitely a must read. #aml #ctf #fintrail #ffe

In light of the past week’s events in the virtual assets space, we’re reminded of the need to be vigilant with our cybersecurity practices. As the adoption of virtual assets increases, so too will the cybersecurity threats and fraudulent schemes posed to users. Keeping your virtual assets safe should be top of mind. This is a very good post on some good practice security techniques. I recommend reading it, but if you’re strapped for time, here’s a summary. Whether you store your virtual assets on a centralised exchange or in a self-custodial wallet, making sure you take steps to stay protected is very important. Firstly, it’s important to remember that not all VASPs are equally secure, especially unregulated ones. Dealing exclusively with VASPs licensed and monitored by established regulators such as Virtual Assets Regulatory Authority [VARA] can reduce the risk of scams or security breaches. But even though large, profitable, regulated VASPs have the financial means to invest in advanced security measures and even reimburse users in case of theft, no system is 100% secure. This is why you should always take the following additional precautions: 1. Secure your devices • Use a dedicated device for your virtual asset transactions. • Install commercial antivirus software and keep your firewall on. • Avoid downloading files – keep documents and media on the cloud instead. • Regularly update your operating system and software to patch vulnerabilities. 2. Strengthen your account security • Use a strong, unique password. Online managers and complex password generators can help. • Enable two-factor authentication (2FA) using a hardware key, rather than SMS verification, which could be vulnerable to SIM swap attacks. • Set up a withdrawal address whitelist with a 24-hour confirmation period to prevent unauthorised withdrawals. • Use a secure email provider and create a unique email for each exchange to minimise phishing risks. 3. Protect your API and KYC information • If you’re using application programming interface (API) keys, never enable withdrawals unless absolutely necessary. • Completing enhanced (Level 2) Know Your Customer (KYC) procedures helps with account recovery and fraud prevention. 4. Avoid phishing attacks • Never click on links in emails or messages claiming to be from any VASP. • Always type the URL address manually in your browser or use a bookmark. • Be careful with unexpected messages from strangers on messaging apps or social media. 5. Consider using both VASP and private wallets To diversify risk, use both a centralised exchange and a private wallet. Less tech-savvy users may prefer storing a majority of their assets on a licensed VASP wallet, while experienced users manage their own wallets for added control. I’m sure there is more we can add to the list, so please add your tips in the comments.

The FATF has published a targeted report examining the risks associated with stablecoins and unhosted wallets. Stablecoins have grown rapidly within the virtual asset ecosystem. By 2025 there were more than 250 stablecoins in circulation with a combined market capitalisation exceeding USD 300 billion. The report also notes that stablecoins accounted for approximately 84 percent of illicit virtual asset transaction volume in 2025. A key focus of the report is the role of unhosted wallets and peer to peer transfers. These transactions occur directly between users without the involvement of a regulated intermediary such as a virtual asset service provider. This reduces the number of control points where anti money laundering and sanctions monitoring typically take place. The report highlights how stablecoins are used alongside other elements of the digital asset ecosystem, including cross chain bridges, mixers and decentralised platforms, to obscure the origin of funds and move value across jurisdictions. From a financial crime perspective, this reflects a shift in how illicit value is moved through digital asset markets. The combination of stable value, liquidity and interoperability makes stablecoins a practical vehicle for cross border transfers, including those linked to criminal activity. In my view, the findings reinforce the need for consistent implementation of regulatory and supervisory frameworks across jurisdictions. The effectiveness of financial crime controls in this area will depend on how quickly oversight, monitoring capabilities and compliance expectations evolve alongside the technology. Silent Eight #moneylaundering #financialcrime #sanctions #compliance #aml https://lnkd.in/efCXmDky

💥 FinCrime Mythbusters 💥 〰️ Myth#10 〰️ Cryptocurrency ❌ Myth: Cryptocurrency is completely anonymous and only used by the criminals ✔️ Reality: Cryptocurrency is pseudonymous. Every transaction is recorded on a public blockchain, creating a permanent digital trail. With the right tools, investigators can often trace flows of funds more effectively. 👉 Regulatory check ✏️ UK regulators, including the FCA and HM Treasury, treat crypto exchanges and custodian wallet providers as ‘obliged entities’ under the UK MLRs. This means they must conduct KYC checks, monitor transactions, and report suspicious activity. ✏️ Blockchain analytics firms have helped trace ransomware payments, sanctions breaches, and even funds linked to terrorism. For example, the takedown of darknet marketplaces has often relied on following Bitcoin trails. ✏️ While criminals do exploit privacy coins, mixers, and cross-chain swaps to obscure funds, regulators are catching up. FATF’s ‘Travel Rule’ and the UK’s implementation of it are aimed at reducing anonymity in crypto transfers. 🛠️ How Crypto challenges legacy transaction monitoring systems? 🖍️ Data mismatch: Legacy TMS consume structured banking data. Crypto transactions are pseudonymous wallet addresses and hashes. Without blockchain analytics integration, red flags go unseen. 🖍️ Identity gaps: Banks monitor verified customers, however in crypto; the counterparty could just be a wallet address. UK MLRs force exchanges to KYC customers, but self-hosted wallets continue to remain a blind spot. 🖍️ New risk typologies: Traditional rule-based systems continue looking for structuring or cross-border fiat layering. Crypto introduces mixers, cross-chain swaps, and DeFi obfuscation. 🖍️ Speed & scale: Fiat monitoring often runs in daily batches. Crypto moves in seconds, 24/7. By the time an alert triggers, funds may already be through five wallets and a mixer 🌪️ 🏹 A little story I have worked on a series of crypto SARs where money mules are tricked into moving money, believing they are helping with a job or a relationship. I have seen victims fall for fake 'investment platforms' and lose everything before they even realized what happened. Don't consider SAR as a paperwork, it is a chance to catch the pattern, break the chain ⛓️, and protect the next person from being exploited. Park the crypto transactions leaving via MSB's and see how it unfolds 🔓 ⚔️ Crypto does not replace legacy transaction monitoring, it infact exposes its limitations. Without blockchain analytics and new typology libraries, traditional systems risk becoming as outdated as a Valyrian steel sword left to rust. #FinCrimeMythbusters #AML #TransactionMonitoring #RiskCoverage #FinancialCrimePrevention #TMStrategy #RegTech #cryptocurrency

Headline: 🔗 From Land Bribes to $28 Billion on the Blockchain: The New Frontier of Money Laundering If you thought the ₹10 Crore IAS bribery case was a lot, the latest investigation by the ICIJ (The Coin Laundry) will put things into perspective. 🌏 New data reveals that a staggering $28 Billion in illicit funds has flowed through major crypto exchanges like Binance and OKX over the last two years. While traditional corruption uses physical "hisaab" sheets, modern crime syndicates are using the speed of the blockchain to outrun regulators. ⚡️ 🕵️♂️ What’s happening in "The Coin Laundry"? The Scale: Billions linked to North Korean hackers, the Sinaloa cartel, and industrial-scale scam operations. 💸 The Strategy: Using "crypto-to-cash" storefronts in cities like Toronto, Dubai, and Istanbul to bypass banks entirely. 🏢 The Red Flag: A single Cambodian entity (Huione Group) allegedly moved $1.4 Billion in USDT in just a few weeks—even after being flagged as a major laundering concern. 🚩 🛑 The AML & KYC "Digital Shift" for 2026: 1️⃣ On-Chain is the New Forensic Lab: We’ve moved past just checking IDs. In 2026, Know Your Transaction (KYT) is just as important as KYC. If you aren't monitoring the origin of the tokens, you aren't seeing the full risk. 🔍 2️⃣ The "Travel Rule" is Non-Negotiable: Regulators are tightening the screws. Virtual Asset Service Providers (VASPs) are now being held to the same high-grade standards as traditional banks. The days of "light-touch" crypto compliance are officially over. ⚖️ 3️⃣ Fiat Off-Ramps are the Vulnerability: The ICIJ report highlights "storefronts" where crypto is swapped for bundles of cash. This is where the digital meets the physical—and where law enforcement is focusing its sting operations. 🛍️ 4️⃣ Sanctions Screening 2.0: With North Korean hackers setting records for stolen funds ($1.5B in a single hack!), real-time screening of wallet addresses against global sanctions lists is a survival skill for FinTechs. 🇰🇵 The Takeaway: Whether it's a local official taking land bribes or a global cartel moving billions in Tether, the goal is the same: to hide the origin. As compliance professionals, our job is to stay one step ahead of the technology. The "paper trail" has become a "digital ledger," but the red flags remain remarkably similar. 🚩 Which do you think is harder to catch? A corrupt official with an accounting sheet, or a cartel moving $1B in USDT? Let’s hear your thoughts below! 👇 #CryptoCompliance #AML2026 #FinTech #BlockchainForensics #KYC #MoneyLaundering #ICIJ #Binance #Tether #FinancialCrime #RegTech #DigitalAssets