1. Customer Identification and Verification (KYC)
The first step is establishing the customer’s identity. It has two parts:
- Identification: collecting the customer’s details (name, date of birth, personal ID number, address);
- Verification: confirming those details against reliable sources, such as an identity document and photo verification.
Learn more: what KYC is and how it works.
2. Sanctions Screening
Next, the customer is checked against international financial sanctions, using official lists such as the UN Security Council Consolidated List, the US OFAC list and EU sanctions. A business relationship with a sanctioned person exposes a company to serious legal and reputational risk.
3. Terrorist Financing Check
A separate check establishes whether the person has any link to terrorist financing. This is a core requirement of the AML/CFT framework, rooted in the FATF standards.
4. Crypto Wallet Risk Assessment (Wallet Screening)
What makes the crypto sector different is that not only the person but also their wallet is checked. Blockchain analytics show how clean the origin of the crypto-assets in the wallet is. Particular attention is paid to:
- Stolen coins: assets obtained through hacks or fraud;
- Dark market exposure: funds originating from illegal online marketplaces;
- Wallets and coins linked to sanctions;
- Wallets linked to terrorist financing.
The check produces a risk score for the wallet, which the company uses to decide on next steps: requesting more information, holding a transaction, or reporting suspicious activity to the Financial Monitoring Service.
Why the AML Check Works in the Customer’s Favour
An AML check protects customers from having their account or wallet unknowingly pulled into a criminal scheme, and keeps the platform they use clean and trustworthy. The more rigorous the checks, the less attractive the platform becomes to fraudsters.
Frequently Asked Questions
What is an AML check?
A review of a customer and their financial activity to detect money laundering and terrorist financing risks.
What is wallet screening?
Analysing a crypto wallet’s history to determine whether its assets are stolen or linked to dark markets, sanctions or terrorism.
What happens if a wallet is rated high-risk?
The company may ask for more information on the source of funds, hold the transaction, or, where required by law, report it to the Financial Monitoring Service.
LC HUB: AML/CFT Consulting and Training
LC HUB (Legal & Compliance Hub) helps companies build an effective AML screening system:
- designing KYC and customer due diligence procedures;
- implementing sanctions screening and wallet risk assessment processes;
- building AML/CFT frameworks and ensuring NBG compliance;
- certified AML training, including a VASP-focused masterclass.
📞 Contact us: +995 551 51 93 39