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 Assess Transaction Risk
In crypto operations, it is important for businesses to understand the origin and context of incoming transactions. This helps support internal risk management and compliance processes.
To assess transaction risk, companies can use blockchain analytics tools provided by independent third-party services. These tools analyse crypto wallet addresses and transaction patterns, offering insights that help businesses make more informed decisions when working with digital assets.
A structured approach to transaction assessment supports operational stability and demonstrates a commitment to compliance in an evolving regulatory environment.
Solutions like BitHide allow businesses to integrate external AML/KYT providers and incorporate risk assessment into their operational workflows. This helps companies organise processes, review transactions when needed, and maintain visibility over their crypto operations.
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