Binance, the biggest cryptocurrency exchange by trading volume, is working with crypto compliance and investigation software provider Chainalysis to implement a new global compliance solution, the companies announced Wednesday.
As part of the partnership, Chainalysis will provide access to its “Know Your Transaction” compliance software, enabling the exchange to monitor cryptocurrency transactions in real-time, according to a press release. In particular, the tool will look for potentially criminal or otherwise illicit activity.
Binance’s chief financial officer, Wei Zhou, told CoinDesk that he hopes the move will “inspire” the crypto industry to take anti-money laundering and anti-terrorism financing measures seriously.
“The ultimate goal of our partnership with Chainalysis is to create an environment in blockchain where everyone feels safe,” he said, explaining, “We believe the fight against money laundering to be collaborative and pro-active.”
While the firm has already invested in know-your-customer (KYC) and anti-money laundering (AML) measures, and hired compliance professionals, he said:
Chainalysis’ system works by using a combination of pattern recognition, proprietary algorithms and different open-source resources to process cryptocurrency services. If suspicious activity is detected during a transaction, the software will generate an alert.
The tool can also help cryptocurrency companies to ease the process of opening bank accounts, due to its compliance with relevant KYC and AML laws, according to the release.
Chainalysis co-founder and COO Jonathan Levin told CoinDesk that cryptocurrency market participants “must develop greater trust in the data and technology underlying our ecosystem” in order for the overall space to advance.
“By working with industry leaders like Binance, we’re able to mold the foundation for credible and robust markets in all jurisdictions,” he said.