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Strengthening AML and Compliance in the Crypto Ecosystem

Written by FiVerity | Sep 22, 2025 2:42:37 PM

Practical steps for digital asset firms navigating today’s regulatory landscape 

By Nilabh Ohol, VP of Product, FiVerity 

Regulators are making it clear that crypto firms will be held to the same standards as banks when it comes to anti-money laundering (AML) and compliance. In just the past two years, some of the industry’s largest exchanges have faced massive penalties: Binance with a record $4.3 billion fine, OKX with $505 million, and KuCoin with nearly $300 million for AML and sanctions violations. Even beyond these headline cases, crypto companies collectively faced over $86 million in AML fines in 2024 alone. These actions underscore a new reality—fraudsters may exploit the gaps, but regulators are closing in, and firms that fall behind on compliance risk more than just fines; they risk their credibility and survival. 

The New Compliance Reality 

Governments worldwide are closing oversight gaps in digital assets, building on more than a decade of regulatory precedent. In the U.S., FinCEN set the tone as early as 2013, issuing guidance (FIN-2013-G001) that administrators and exchangers of virtual currencies are considered money services businesses (MSBs) under the Bank Secrecy Act. That classification required crypto firms to implement AML programs, register with FinCEN, and file suspicious activity reports—placing them under the same core obligations as traditional financial institutions. 

Since then, the rules have only expanded: 

  • MiCA (EU): Requires licensing and reserve requirements for stablecoins to ensure transparency and accountability. 
  • FATF Travel Rule: Mandates identity-sharing for cross-border crypto transfers to curb anonymity in illicit finance. 
  • GENIUS Act (U.S.): Focused specifically on stablecoin issuers, extending Bank Secrecy Act and AML obligations to this growing sector. 
  • Other frameworks (UK, Hong Kong, Singapore): Establishing rules for stablecoins and crypto payments to safeguard consumers. 

The direction is clear: regulators expect crypto firms—whether exchanges, stablecoin issuers, or wallet providers—to meet the same standards as banks, including robust KYC, transaction monitoring, suspicious activity reporting, and licensing. 

Where Crypto Firms Struggle 

Even with clear expectations, execution is tough. Common pain points include: 

  • Onboarding customers quickly without sacrificing compliance 
  • Navigating fragmented rules across jurisdictions 
  • Detecting sophisticated laundering and fraud tactics 
  • Balancing transparency with user privacy 
  • Managing compliance with lean teams and budgets 

Firms that fall behind risk penalties, reputational damage, and customer attrition. 

Practical Best Practices 

Forward-looking firms are addressing these challenges by: 

  • Adopting risk-based approaches to focus resources on high-risk activities 
  • Using AI and machine learning to detect evolving fraud patterns in real time 
  • Leveraging blockchain analytics to trace suspicious activity across crypto on-ramps and off-ramps 
  • Monitoring onramps and offramps, where illicit funds often enter or exit the crypto ecosystem.  
  • Collaborating across institutions and industries to share intelligence and align on responses 

These practices not only reduce regulatory risk but also build customer confidence. 

From Fragmented Compliance to Collective Fraud Intelligence: FiVerity’s Approach 

Fraudsters collaborate across borders, platforms, and industries. Institutions only see the fraud that hits their own walls, leaving them blind to threats spreading elsewhere. 

FiVerity solves this by enabling collective fraud intelligence. The platform aggregates fraud signals from banks, credit unions, fintechs, crypto firms, and law enforcement. Combined with secure collaboration tools, this gives firms visibility into fraud typologies long before they surface in individual alerts. For Crypto firms, this means: 

With collective intelligence, digital asset firms can: 

  • Detect emerging schemes like mule networks, scams, and synthetic identities before they scale into AML violations 
  • Strengthen suspicious activity reporting (SARs) with more complete intelligence, improving accuracy and reducing filing delays 
  • Conduct joint investigations under Section 314(b), securely collaborating with other institutions to trace illicit activity across borders and platforms 
  • Enrich investigations with insights from across the financial ecosystem, making compliance reviews faster and more defensible 
  • Shift from firefighting to prevention, aligning fraud defense directly with AML program requirements 

By uniting fraud signals and cross-industry collaboration, FiVerity helps firms move beyond siloed compliance and build proactive defenses. 

Learning from the Field 

Recent enforcement actions have shown the risks of underestimating compliance. Several exchanges have faced penalties for failing to file suspicious activity reports, while others lost licenses altogether. On the other hand, firms that invested early in compliance automation and industry collaboration are gaining credibility with regulators—and customer trust. The lesson: compliance done right isn’t just about avoiding fines; it’s a competitive advantage. 

The Road Ahead 

AML and compliance are no longer cost centers—they’re enablers of growth and legitimacy for crypto. By investing in modern frameworks and embracing collective fraud intelligence, firms can stay ahead of regulators, reduce losses, and demonstrate that digital assets are safe, trustworthy channels for global finance. 

Want to learn more? Explore how FiVerity helps digital asset firms strengthen fraud defense and compliance through collective intelligence. 

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