Digital finance has completely overhauled the financial world. While it offers profitability, it also comes with a dash of risk. In some ways, crypto is a mix of two worlds simultaneously. On one hand, we have positives like transparency, decentralization, and innovation. On the other hand, we have an ecosystem that can be used to further criminal activities like money laundering.
Therefore, in many ways, crypto is like a gun. It all depends on who is yielding it. However, authorities have realised the importance of this caveat and have gone on overdrive to make some overhauls. Crypto firms are taking active strides to introduce AML or anti-money laundering measures.
Is AML Necessary?
Illicit organizations have long used crypto to launder money through their non-regulated avenues. At the same time, traditional banking is heavily steeped in KYC culture, which only serves people with an account backed by valid identification. As a result, this can thwart illicit individuals’ plans to launder or whitewash money.
Individuals have repeatedly used this anonymity to mask their dirty money. Therefore, cybersecurity and crypto firms are introducing credible and useful checks that keep people from money laundering.
Even though the concept is still in its infancy, reports suggest that the protocol will be heavily steeped in AI and ML protocols. The regulatory pressure plays a crucial role in the grand scheme. In other words, the AML protocol could soon become mandatory across exchanges, whether good or bad.
Making AML mandatory could remove the decentralized nature of the landscape, making things difficult for the general population. Still, it is the payoff of security.
