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AML SYSTEMS FOR THE CRYPTO MARKET – HERE’S WHAT YOU MUST KNOW

In the modern world, criminal activities have taken the virtual road and fraudsters have developed highly sophisticated ways of executing their evil plans. Unfortunately, money laundering has significantly increased over the years. As of the reports from UNODC, two to five percent of the global GDP is laundered each year. Money launderers have figured out new ways of laundering money. Combating them is becoming an issue for all industries, especially the crypto market. Cryptocurrencies are digital assets without any physical existence. Due to their anonymous nature, money launderers use crypto exchanges for their illicit gains.

With the world taking necessary steps to make payments digital with cryptocurrencies, Bitcoin, Etheruem, XRP, and others have become the targets for concealing the origin of illegally earned money. To combat money laundering in the crypto market, there is a need for Anti-Money Laundering (AML) checks to ensure launderers stay away from crypto exchanges. Let’s take a look at what are AML checks, how do they work, and the benefits it offers to the crypto market.

 

What are AML Checks?

Anti-Money Laundering checks refer to a set of laws and solutions that help businesses identify fraudsters before they mess up transactions. Money laundering has been terrifying financial institutions or a very long time. With cryptocurrencies being the target of money launderers, crypto exchanges also need Anti-Money Laundering checks to make sure criminals stay away from the business. It also helps in protecting other legitimate investors from trading balck money.

 

How Does AML Verification Work?

Anti-Money Laundering (AML) system verifies that all the customers are who they claim to be. Without verification, anyone can enter the business and cause troubles for other legitimate users. AML screening works in the following simple steps.

  1. First, crypto exchanges have to verify the identities of clients during the onboarding process.
  2. Then, the identities are cross-checked with various sanctions and PEPs lists in the AML system.
  3. In case of issue, the verification is declined and the customer is informed about the decline.

 

Benefits of AML Checks in Crypto Market

AML checks offer crypto exchanges several benefits and the most important ones have been discussed below. Keep reading to find out.

 

Prevent Fraudsters from Causing Issues

Money laundering causes a lot of damage for businesses including crypto exchanges. Money launderers place and layer their money in crypto exchanges. It gets easier for them to hide their illegally earned money. Unfortunately, investigations result in loss for the business. Culprits fly away after fulfilling their malicious intentions and leave your business at risk. Employing anti-money laundering systems ensures that businesses identify fraudsters before they can become a problem for other customers and the business.

 

Avoid Hefty Non-Compliance Penalties

Recommendations from FATF and other regulatory authorities have made it pretty clear that non-compliance with KYC/AML compliance will result in hefty fines for the business. If a crypto exchange fails to comply with the regulations, hefty penalties come rushing to their doorstep. In order to save crypto exchanges from hefty fines, it is better to add robust anti-money laundering checks for all the customers who apply.

 

Increase Credibility of the Business

Making your business credible for the customers is what all businesses aim. However, money laundering does not let that happen and losing customers’ trust means bad reputation and dropping sales. Increasing the credibility of your enterprise in the eyes of customers demands robust AML systems. This will help customers trust you with the sensitive information you need during the customer onboarding process.

 

Conclusion

Money laundering is a rising threat for all the businesses across the world. The primary targets are finance, gambling, real estate, and crypto sectors. However, the majority of the sectors are at risk. Considering the rise in money laundering, regulatory authorities are in action to combat crimes and enforce stringent laws. As per these laws, all countries have to perform identity verification and anti-money laundering checks to ensure fraudsters stay away from the company. AML programs detect money launderers before they can cause any issue. These systems also ensure high credibility of the business for customers. On the other hand, businesses can stay safe from non-compliance penalties by the regulatory authorities.

Finance

WHAT’S NEXT? PAYMENT TRENDS IN 2021

Philip McHugh, CEO at Paysafe

 

Undoubtedly COVID-19 is going to continue having an impact on us all at least for the next few months and maybe all of this year, but there are still reasons to be optimistic. The industry continues to evolve quickly, and that in mind, here’s five of our predictions to watch out for in payments in 2021:

 

1. New consumers to online change the digital payments landscape

As more consumers headed online during the first wave of COVID-19, businesses noticed that their customers were also paying differently. Three quarters (76%) of the businesses we recently asked for our Lost in Transaction research report series said that consumers were using different payment methods during the pandemic, with the increased use of digital wallets being the most common. Having more customers that were new to eCommerce, and customers now shopping regularly with businesses that they were not comfortable sharing their financial details with, were key reasons for this.

Consumers confirmed this was true. When we asked in April, 18% of consumers told us they shopped online for the first time during the pandemic. With 38% of consumers telling us they are planning to shop online more even when COVID-19 is no longer a factor in their lives, we should see this shift to alternative payments continue.

 

2. SCA will drive mass adoption of biometric authentication 

Perhaps the first factor to shake up the payments industry in 2021 is going to have the greatest impact of any trend we will see in the coming year. That is because, after a series of extensions, the deadline for PSD2 Strong Customer Authentication is fast approaching. From December 31 2020 any transaction that isn’t verified by multi-factor authentication will be automatically declined.

One of the inevitable consequences of this is going to be a huge increase in the use of biometrics to verify payments. With the growth of mCommerce that we have seen before and during COVID-19, it seems very likely this will accelerate beyond predictions made at the initial SCA deadline in 2019. Juniper Research has already predicted that biometrics will be used for more than 18 billion transactions in 2021, with a value exceeding $210 billion in 2021.

 

3. A renewed focus on 5G

The importance of 5G and the growth of the IOT was another prediction we made for 2020. But while the impact of the pandemic has been to accelerate many of the trends we expected to see, perhaps one area where the pandemic has actually slowed adoption is the growth of 5G. With consumers spending so much time at home, appetite for personal 5G-enabled devices has been limited.

But at the same time, the need for the in-store shopping experience to be as frictionless as possible is now more important than ever. Almost half (46%) of businesses told us that they had lost sales in 2020 because their checkout times were too slow. So the use of 5G technology to overhaul the checkout will be back at the top of retailers’ agendas.

Almost half (47%) of stores told us that 5G will mean the end of the traditional checkout, and more than half (53%) believe that Amazon-Go style frictionless checkouts are the future of retail. Omnichannel experiences where consumers shop in a store and then pay via a digital checkout on a smartphone app are also on businesses’ radars.

 

4. A surge in subscription models

Almost one fifth (18%) of stores told us that they had launched a subscription services during the pandemic, and this is not only a result of business need but also customer demand. Overall, 27% of consumers told us that they were already planning to increase the number of subscriptions they had in the future, and this rose to 37% for consumers aged 18-34.

The growth will not be limited to digital either. Pret A Manger recently launched the first in-store coffee subscription service in the UK, and we expect to see similar models populating malls and independent stores soon.

Also, only the initial purchase of a subscription is subject to PSD2 multi-factor authentication. So for some businesses, launching a subscription service may be a way to reduce friction in the online checkout.

 

5. AI and machine learning as the cornerstone of fraud prevention

We’ve known about the importance of artificial intelligence (AI) and machine learning to financial services for years, but in many cases the industry has been slow to implement the technology. With the sophistication of financial crime increasing, and the growing concerns of consumers of being a victim of fraud, it is no surprise that adoption is now accelerating rapidly.

Banks have currently spent as much as $217bn on AI applications already, and in 2021 AI and machine learning based systems will be the standard in fraud prevention.

 

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Top 10

THE TOP 5 CRYPTO EXCHANGES IN THE WORLD YOU SHOULD KNOW ABOUT

Introduction

Crypto Exchange is a very important part of the Cryptocurrency EcoSystem. Crypto exchanges are the platform where transactions take place. You can also purchase Bitcoins in crypto exchanges.

It is a marketplace in the digital sphere that allows traders to purchase and sell Bitcoins. Do note that fiat currencies and altcoins can also be used in crypto exchanges. Since you have clicked on the link to this blog, there is a high chance you are a Bitcoin investor, or you are someone who likes to keep a keen eye on the crypto space.

And why should you not? Given all the buzz that cryptos are making in the financial markets. Bitcoin is the most famous cryptos, so I will be talking only about bitcoins in this blog for the sake of convenience.

 

Crypto Exchanges 101

A Crypto Exchange’s primary objective is to act as a broker and bring a buyer and seller to one place. It is pretty much like a traditional stock exchange; the only difference is that everything related to crypto exchanges happens digitally.

However, the process is not that different. On Crypto exchanges, traders have the option to sell and buy Bitcoins after inputting a value or order. When a trader selects the market value, the crypto scans the best market value available for the Bitcoins and presents it to the trader. Visit daily profit to start investing.

In order for a trader to transact in bitcoin, he needs to get himself signed up with the exchange platform. And then go through the various amounts of verification procedures. Once the trader has successfully verified his identity. He can start trading. But before that, he needs to transfer his fiat currencies to Bitcoins, and only after that, he can buy Bitcoins.

The currency exchange methods vary from exchanges to exchanges. Some allow users to transfer it via wiring through the bank; some well-established exchanges allow a direct transfer from the bank. Some allow the use of credit and debit cards.

 

Features of a Crypto Exchange

Crypto Exchanges have a lot of features that will ease up your transaction process.

  • Crypto Exchanges are decentralized – Decentralised means it operates without any governing body. There are no intermediaries in between. It offers peer to peer trading without having to show an account of your spending to the regulatory body.
  • Low Processing Fees – As crypto exchanges are decentralized, it is a peer to peer connection.

 

The Top 5 Crypto Exchanges In The World You Should Know About

There are more than a thousand crypto exchanges; trying them out one by one will take a lifetime. So as a crypto investor, I have personally selected the top five most popular crypto exchanges that you ought to know about.

1.    Gemini

The most widely used Crypto exchange on the face of the Earth is Gemini. It is perfect for all the major cryptocurrencies, but when it comes to Bitcoins. The only little drawback that I find in Gemini is that it asks for way too much personal information.

2.    Etoro

Etoro is more of a financial trading service than an actual crypto exchange, but it is worth talking about nonetheless. Crypto investors hold this app in high regard; it has a very good reputation. It has very high processing fees, which may annoy some traders.

3.    Kraken

When it comes to security, none can match Kraken. Apart from that, it has a very big user base. And it also charges very low transaction fees. A handful of traders do not like Kraken as it does not offer the best customer support services.

4.    Binance

Unless you had been living a rock, you must know Binance. Binance is the go-to crypto exchange. You get to see the ads of the Binance app over the Internet a lot. Binance gives you the added advantage of trading huge amounts of cryptos in a single time. Binance is only meant for experienced traders. It is not recommended for newbies.

5.    Coinmama 

Coinmama offers very strong security. The UI is user friendly. The best part is the customer support. I personally like Binance the most because it takes a step further and makes sure that proper security measures are implemented and add to that its classy user interface.

Many traders may not like Coinmama as the significant-high processing fees.

 

Final Words

There you go, there was the list of top 5 crypto exchanges. Please invest your money at your own risk. You should have a very strong knowledge of the crypto market before investing. Otherwise, you may face huge losses.

 

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