Regulators are intensifying supervision and enforcement of anti-money laundering (AML) laws, aiming for a zero-tolerance approach to criminal activity. As cryptocurrency usage expands, service providers face increased challenges from money launderers exploiting the speed and anonymity of online virtual asset transactions. Users engaging in buying and selling cryptocurrencies rely on online wallets and exchanges, enabling swift global transfers outside traditional financial systems. The absence of robust regulatory oversight in these platforms attracts money launderers, drawn to the opportunity to convert illegal funds into cryptocurrency and evade AML checks imposed by traditional financial institutions.
Exchanges typically employ dedicated software to investigate illicit activities, such as money laundering and terrorist financing. This software screens potentially risky cryptocurrency transactions to ensure adherence to regulatory standards and monitors both transaction and user risk. The system is designed to identify red flags across various aspects, including transaction types, patterns, anonymity, senders and recipients, source of funds, and geographical risks. It underscores the adaptation of traditional criminal strategies to the crypto landscape and outlines specific behaviours indicative of money laundering. Notable red flags encompass activities like structuring transactions to avoid reporting thresholds, exhibiting unusual transaction patterns, and exploiting the anonymity features inherent in cryptocurrencies.
At Crypto Legal, our dedicated team of solicitors specialises in guiding individuals and businesses through the complex landscape of Anti Money Laundering (AML) laws and Know Your Customer (KYC) regulations within the evolving crypto legal framework. We understand the critical importance of compliance with AML and KYC regulatory standards to help our clients avoid legal complications, audits, and criminal charges.
Can exchanges block or freeze customer funds?
Your account could be locked for several reasons, exchanges including Binance, Coinbase, OKX, Gemini, Kraken and others have provided several reasons why they might have blocked or frozen an account including when:
- A hacker may have access to your account.
- You may have recently interacted with a known scammer.
- You have a potential nexus to a sanctioned individual or an entity or live in a sanctioned location.
- You may have travelled to a sanctioned country or territory.
- You may have failed to complete the verification process. You may be missing a document for KYC or AML purposes.
- You may not have provided accurate documentation regarding the source of funds or source of wealth.
- Your funds may be associated with a hack, scam, or rug pull that happened in the DeFi space.
- You may be a hacker or otherwise malicious user.
- Your account is locked at the request of a Law Enforcement Agency (Police)
- Unusual activity or transactions on your account
- You may have used a VPN
- You may have created an account in another country where you don’t reside and log in from.
We assist clients in all matters relating to locked accounts on Binance, Coinbase, OKX, Gemini, Kraken and other exchanges. We encourage you to reach out to us via email to firstname.lastname@example.org. Our experienced legal team will work diligently to evaluate your situation and provide appropriate guidance and support.