Identifying Politically Exposed Persons in Crypto Currency Trades

Though globally there is a strong momentum against stopping the politically exposed persons from entering the mainstream financial markets, crypto currencies have granted them a free access. In an interesting study conducted by the Mitek Systems of UK it was observed that there are no checks conducted to check if the account belongs to Politically Exposed Person or not.

More than 68% of crypto exchanges and wallets fail to conduct proper identity checks meaning that criminals and Politically Exposed Persons can trade freely.

In order to sign up to exchanges and wallets that do not perform KYC, customers only need a verified email address and mobile number. Both of these are easily obtainable without ID—any webmail service such as Gmail or Outlook.com can provide an email address, while in many countries a pay-as-you-go mobile phone would provide the number. Armed with these, users of the services that fail to meet upcoming AMLD5 regulation can buy and sell cryptocurrencies and exchange them for fiat currencies.

These challenges have combined to lead governments and regulators to consider introducing a framework to limit some of the volatility, reduce fraud and losses stemming from poor practice and ensure that there is a degree of accountability and compliance with action taken to minimise criminal activity, including tax evasion, money laundering, circumventing of sanctions and funding of terrorism and criminal activities.

Regtech companies like Riskpro play a significant role in identification of the Politically Exposed Persons in India. Riskpro offers various innovative solutions based on the information it captures for the individuals who contest the elections. Riskpro provide this information as the API or webservice to its clients and the Crypto Currency Exchanges can be highly benefitted due to this service offering related to the Crypto Currency Exchanges. Adding such APIs will actually help these Crypto Currency Exchanges to validate the process and to show to gain the reputation in the mainstream financial world.