Many are still concerned about the security of using cryptocurrencies. Overall, digital currency is risky because of its volatility, but many are afraid that it may be outlawed because criminals use crypto to hide their crimes.
However, thanks to a simple AML check crypto method, a crypto exchange or any other business related to cryptocurrency can secure the safety of users and prevent anti-money laundering crimes. However, companies have various ways of performing such checks: by having a dedicated team or by outsourcing the task to an AML service provider. This article covers this topic.
➤ Understanding AML Service Providers
AML service providers, also known as AML compliance service providers, are specialized businesses that provide services and solutions to help businesses, like crypto exchanges, satisfy their AML compliance needs.
These service providers offer a number of services and technologies to assist organizations in preventing, detecting, and reporting potential money laundering and terrorist funding operations. For instance, a crypto exchange may detect suspicious activity thanks to such outsourced services and prevent a crime by reporting it to a specific institution.
➤ What Are In-House Compliance Teams
AML in-house compliance teams are dedicated teams within an organization that is responsible for ensuring compliance with AML rules and implementing necessary measures to prevent money laundering and terrorist funding. The simplest explanation is comparing this team to a separate department in a company, for instance, having an HR department.
These teams work directly for the organization and are responsible for the development, implementation, and maintenance of the AML compliance program. It may be a more complicated solution than having an AML service provider. Moreover, this method typically entails more expenses.
➤ Benefits And Drawbacks Of Outsourcing AML
Let’s see the benefits and drawbacks of outsourcing this task:
- Expertise and professional services by skilled teams of people.
- Scalability due to having the option to add more services in the future.
- Cost-saving properties.
- Mitigating risks of errors.
However, there are a few drawbacks to this solution:
- Lack of control over AML processes.
- Potential communication risks when detecting suspicious activity.
You should be aware of all the benefits and limitations before using this solution.