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Blockchain Revolutionizes Anti-Money Laundering (AML) with Distributed Ledger Technology (DLT)

How DLT is Streamlining KYC Checks, Enhancing Security, and Reducing Risk in Financial Transactions

In an era where financial crimes are on the rise, a new wave of technology is emerging to revolutionize Anti-Money Laundering (AML) checks. Distributed Ledger Technology (DLT), also known as blockchain, has been gaining traction in recent years for its ability to securely store and transmit sensitive data. In this article, we’ll explore how DLT can be harnessed to prevent money laundering in financial transactions.

The Watchdog: AML Analyst

In the world of AML checks, analysts play a vital role in monitoring customer behavior and identifying potential risks. With DLT, these analysts can access real-time data on a decentralized network, ensuring that all information is secure, transparent, and tamper-proof. The hash functions used in DLT serve as a seal, alerting other institutions on the network if anyone attempts to manipulate KYC data.

Constant Vigilance: KYC Monitoring

DLT’s Smart Contracts enable automated KYC monitoring, reducing the risk of manual errors and increasing efficiency. By storing all necessary documents and analyses on the blockchain ledger, financial institutions can access customer information quickly and accurately, expediting loan applications and other financial transactions.

Unleashing Blockchain’s Potential in AML: Key Use Cases

  • Streamlining Bank Account Opening Procedures: DLT eliminates data silos, enhancing risk classification and providing time-stamped records for bank account opening procedures.
  • Facilitating Loan Applications: With DLT, various departments within a financial institution can access customer records quickly, expediting the loan application process.
  • Enhancing KYC Remediation: Automated reminders can be sent to customers to upload updated documents, reducing the risk of manual errors and increasing efficiency.

Does Laundering of Money Occur in Cryptocurrency Transactions?

A recent report from a renowned blockchain analysis firm revealed that criminals managed to launder $8.6 billion through cryptocurrencies in 2021, a 30% surge compared to the prior year. While this figure is alarming, it’s dwarfed by the estimated $800 billion to $2 trillion laundered annually through fiat currency.

Conclusion

As we’ve seen throughout our discussion, DLT has vast potential in AML checks, from preventing money laundering in crypto transactions to enhancing AML and KYC procedures. By harnessing the power of blockchain technology, financial institutions can increase security, transparency, and efficiency. At Webisoft, we specialize in building custom blockchains and smart contracts that enhance security, efficiency, and trust. Join us in revolutionizing your financial operations with DLT today!