Risk Management Process

Anti Money Laundering (AML)
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Anti-Money Laundering or ‘AML’ is a set of procedures aimed to ensure that the financial system and intermediaries are not used to facilitate money laundering (the illicit process of ‘cleaning’ financial gain from criminal activity). Often these procedures look to comply with multinational and national legislation that details what financial intermediaries’ requirements are to adhere…

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Asset Confiscation
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Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to the state(s). Upon transfer, the person(s) or entity (ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture lose all rights priorly exercised…

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Beneficiary (beneficial owner)
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The term beneficial owner has two different definitions depending on the context:· The natural person who ultimately owns or controls an account through which a transaction is being conducted.or· The natural persons who have significant ownership of, as well as those who exercise ultimate effective control over, a legal person or arrangement. By identifying the…

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Blacklisted Addresses
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An internal list of names (including places, persons, entities, and individuals) that are screened to identify any sanctions exposure, in addition to government and vendor-maintained sanctions lists. Other potential additions to a firm’s internal blacklist may come from OFAC advisories and other warnings that list entities that did not merit being placed on the SDN…

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Clustering Algorithms
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Clustering algorithms are used to identify blockchain addresses belonging to the same owner by analytical means. Good clustering algorithms can identify hundreds of thousands of suspect’s blockchain addresses just based on one address confirmed as belonging to the suspect. This includes the determination of suspects’ addresses on different blockchain networks. In most cases clustering analysis gives the level…

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Combatting the Financing of Terrorism (CFT)
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Combatting the Financing of Terrorism or ‘CFT’ are a set of procedures deployed by obliged entities to ensure that the financial system and intermediaries are not used to facilitate the funding of terrorist acts and groups. Terrorist groups need funding to recruit and support members, plan operations and have a logistics hub. By having proper…

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Counterparty Risk
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Counterparty risk is the risk that an entity that is a party to a financial transaction is associated with illicit activity. Bitcoin and cryptocurrency money launderers for example would be benefactors or intermediaries with a high Counterparty Risk Score or ‘C-score’. The criteria that counterparty risk is measured against with proper due diligence is comprehensive….

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Customer Due Diligence (CDD)
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Customer Due Diligence or ‘CDD’ is a process to assess all of the risks associated with a client or relationship, including KYC, and that requires that the overall client conduct, and transactions are assessed to determine if this is unusual and reportable. CDD requires that obliged entities assess the risks before entering into a relationship,…

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Destination of Funds
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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…

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E-Discovery
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E-Discovery is a set of analyses, typically in relation to litigation or criminal proceedings, that seek to collect, preserve, review, and exchange information in electronic formats for the purpose of using it as evidence. In cryptocurrency fraud cases conducted by investigative analytics by companies such as Coinfirm E-Discovery is aimed to extract blockchain addresses, transactions or private keys from the…

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