In 2024, Tether and Circle froze over $1.3 billion worth of stablecoins. At the same time, one in every twenty stablecoin transactions was linked to high-risk or suspicious addresses. The risk? You don’t need to engage in anything illegal to be impacted. Just a single questionable deposit can lead to wallet freezes, blocked exchange accounts, and serious reputational damage.
In this article, the BitHide team explains how AML screening operates within crypto — and what actions businesses should take to remain compliant and protect their assets.
How AML Screening Works in Crypto
Anti-Money Laundering (AML) checks in crypto are designed to detect and prevent the movement of illicit funds. These screenings evaluate wallet addresses, transaction histories, and behavioural patterns to identify risks such as connections to mixers, sanctioned entities, or addresses previously flagged for fraudulent activity.
Platforms like Chainalysis, Crystal, and Bitrace assign risk scores to each transaction based on its source and transaction flow. Today, most exchanges and stablecoin issuers rely on these analytics to block or freeze assets linked to high-risk sources — even if the recipient has no knowledge of the connection.
As regulatory scrutiny increases globally, AML compliance has become a fundamental requirement, shaping how crypto platforms operate and collaborate with law enforcement agencies to promote financial transparency.
Real-World Example: When a Legitimate Business Lost Access to Its Crypto
In 2024, a compliant business received what seemed like a routine ETH payment from a client from Asia. Weeks later, their Gemini exchange account was unexpectedly frozen.
The funds were traced back to Tornado Cash, a mixer under sanctions. Although the company had no ties to Tornado Cash, the transaction was still flagged as high-risk by Gemini’s AML system. Over $100,000 was locked, and after months of discussions, only part of the funds was recovered — the rest remained frozen.
This case is a clear reminder: even a single risky transaction can put your entire wallet at risk. Without robust AML crypto screening, even fully compliant businesses can face serious consequences.
How to Check the AML Risk Score
Often, freezes and reputational issues occur not because of your direct actions, but because of what enters your wallet. That’s why monitoring incoming funds is critical. Identifying risky assets early and managing them separately from clean funds gives your business the control it needs to stay compliant and protected.
To check the AML risk score, use blockchain analytics tools that scan wallet addresses and flag suspicious transactions based on their origin and behaviour. These tools provide real-time insights, helping you make informed decisions before accepting or interacting with potentially compromised funds. Proactive risk assessment not only helps safeguard your operations but also demonstrates your commitment to compliance in an increasingly regulated crypto environment.
With the BitHide crypto wallet, you have full flexibility. You can run automated AML checks on every incoming transaction or manually review assets as needed. The wallet organises funds by risk level, helping you isolate suspicious crypto without disrupting daily operations. Additionally, you can set your own custom risk rules to align with your company’s compliance policies.
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