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“Project Participate” Works to Enhance Detection of Suspicious Activity Involving Cryptocurrencies

“Project Participate” Works to Enhance Detection of Suspicious Activity Involving Cryptocurrencies

Project Participate, a collaboration of some of the world’s leading virtual asset companies, has issued its first report on the detection of suspicious activity involving virtual assets.  Founded in March 2019 and formally announced in June 2019 at Europol’s 6th Cryptocurrency Conference, virtual asset companies have joined forces to improve industry’s ability to identify suspicious transactions and to report that activity to regulators.

in June 2019, the Financial Action Task Force (FATF) published a report, “Indicators of Suspicion for Virtual Asset Service Providers”, relating to virtual assets and Virtual Asset Service Providers (VASPs). The guidance indicated that VASPs, which includes virtual asset exchanges, are expected to report suspicious transactions within the regulatory framework of the jurisdiction where the VASP is registered, licensed and regulated. 

However, the new FATF guidance did not specify in detail what constitutes suspicious activity or how to identify such activity in the context of traditional “red flags” as applied to the financial services industry, and little information exists from other sources to guide VASPs, law enforcement, regulators, supervisory authorities or other interested parties in identifying such activity. 

The Project Participate report helps fill those gaps by identifying typologies of potential criminal activity and related indicators of suspicion, as well as recommended measures to better detect and deter such activity. The report has been shared with the FATF and is available to vetted parties, including VASPs, software providers, and government officials.

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Project Participate reflects a proactive effort by virtual asset companies to promote compliance and share best practices for preventing, detecting, and reporting potential money laundering, terrorist financing, and other criminal activity involving virtual assets.  Current participants include Binance, Bitfinex, Bitpay, Blockchain Alliance, Blockchain Intelligence Group, Blockgeeks, Chainalysis, CipherTrace, Crypto Defenders Alliance, Crystal, Elliptic, Global Digital Finance, Outlier, Paxful, Tether, and a number of thought leaders in the virtual asset space.  

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