Destination of Funds is part of the anti-money laundering process that aims to identify the final destination account of funds. In relation to cryptocurrency AML practices, such as those employed by Coinfirm, it is blockchain addresses that hold or received funds originating from misappropriated wallets, as well as evidencing transaction paths (chains of consecutive transactions) between them. To identify the destination of funds accurately various on-chain and off-chain tracing methods can be deployed.
Identifying the Destination of Funds is crucial when criminals are employing ‘layering’ or other methods used to obfuscate where funds’ intended final address is and who is the true final beneficiary in the money laundering process.
In cryptocurrency money laundering rings so-called ‘privacy coins’ are often deployed with in-built ‘mixers’ or ‘tumblers’ to the cryptographic code to make identifying the Source of Funds and Destination of Funds particularly difficult, if not impossible with today’s analytics methods.
For this reason, many global and sovereign nation’s regulators have cracked down on this asset class, leading to the delisting of a number of them. South Korea for instance, has banned the use of privacy coins.