AML: Why Do WhiteBIT Traders Need Address Verification?

There is an increasing number of cases in which some cryptocurrency exchanges block funds at the regulator’s request. In this article, we will talk about a tool that the WhiteBIT exchange introduced in advance to protect users’ assets and interests and the platform’s compliance with international AML standards.

The Importance of AML

Cryptocurrency is a growing area of ​​electronic financial transactions, and it is essential to understand that it is decentralized and therefore anonymous. And despite the fact that information about each transaction is stored on the blockchain network, it was previously impossible to know where the funds came from to the wallet and whether they are “clean,” which means not related to any criminal or prohibited activities.

AML is implemented by almost every crypto exchange that is interested in ensuring that its clients do not buy dirty assets or contact criminals (given the global goals of the FATF and the European Union).

WhiteBIT independently checks counterparties and also makes it possible for clients to carry out such checks. Therefore, the virtual assets that are stored in the cold wallets of the exchange are not associated with criminal activity due to internal checks.

Reference: domestic legislative requirements for the work of operators are based on the standards of the FATF group, EU directives, and the recommendations of the Committee of Ministers of the Council of Europe. In April 2020, Bill No. 2179 came into force, which obliges digital service providers to independently conduct address checks for involvement in illegal activities.

The Way AML Checks Work

Unfortunately, the practice of implementing effective internal procedures and mechanisms to protect users from unreliable interactions is still far from widespread. WhiteBIT has a separate tool for checking addresses for involvement in criminal and prohibited activities. At the moment, you can analyze BTC, BTH, ETH wallets, and any LTC wallet.

The page comprises a list of labels that serve as risk signals. Thus, on, it is possible to identify, for example, a counterparty that has been involved in the illegal acquisition of funds of its users (SCAM), extortion, or in the theft of funds by hacking, which represents the Darknet environment, and so on.

It is optimal for clients of exchanges, including WhiteBIT, to check the address before each new interaction. Just because a counterparty scores low on a risk scale today does not mean that it will remain the same in the future.

WhiteBIT users formulate reviews on this issue as follows: if after some time after the interaction, the counterparty is classified as risky and falls under the investigation procedure, it is recommended to record each check. This will make it easier to use WhiteBit anyway.