Brett Harrison, the CEO of FTX US, said that recent public assertions that crypto is an effective means of evading sanctions couldn’t be more wrong.
Harrison said that regulated cryptocurrency exchanges have advanced technology and effective procedures for enforcing AML and sanctions, making them an improbable road for moving sanctioned money.
AML and KYC regulations leave no wiggle room for sanctioned users
According to Harrison, FTX US and all other exchanges registered in the U.S. are required to collect identifying information of every user, including name, date of birth, phone number, social security number, and photo ID.
All of the information an exchange collects is then cross-checked against government databases to ensure that the name given by the user matches their social security number. If the exchange can’t verify the integrity of the information, the user is automatically rejected from the platform and prohibited from trading.
Users who get their identity verified are then checked against all sanctions lists and watchlists. FTX US checks the U.S. Treasury’s Office of Foreign Assets Control (OFAC) list, the Department of Justice’s FBI wanted list, and the United Nations consolidated sanctions list. If found in any of those lists, the users’ registration application is rejected.
Going through the first two verification steps doesn’t mean a user is safe from additional controls, Harrison said.
He noted that FTX US and other exchanges also monitor users’ fiat transactions. Deposits or withdrawals from sanctioned banks or other blacklisted sources are blocked, and the user’s account is locked.
FTX US uses the same on-chain risk and transaction monitoring tools that other government agencies in the U.S. use, Harrison said.
“These tools have databases of known sanctioned addresses, heuristics that determine geographic locations and machine learning algos that identify suspicious patterns in transfer histories. If we detect suspicious activity, we block the user from moving assets,” he explained.
Cryptocurrency exchanges have extremely advanced technology and effective procedures for enforcing anti-money laundering (AML) regulations and sanctions. When combined with the transparent nature of blockchain technology, this means that using centralized, regulated cryptocurrency exchanges to move funds undetected is an impossible task.
Recent allegations that Russian companies and individuals would retort to cryptocurrencies to avoid the crippling sanctions imposed by the west have little to no merit. Even if they were to use decentralized exchanges, unregulated OTC desks, or even peer-to-peer transfers, the movement of a large amount of funds on the blockchain would alert both the industry and the authorities, potentially leading to a downward market move that would reduce the value of the transfer.
