How to prevent illegal money laundering activities in bitcoin exchange business
We know that bitcoin exchange business solely serves for trading or exchanging the bitcoin between to people. But some bitcoin exchange website are not concerning about trading limits, it gives the free way for people to do money laundering through bitcoin exchange website. It directly affects the goodwill and legality of a bitcoin exchange website. So in this article, we are going to understand about how to avoid money laundering activities in a bitcoin exchange business.
Before that let us have a short understanding about what is money laundering?
It is an activity which conceals the origin of illegal money, typically by means of money transfers through foreign banks. Illegal money (Unpaid tax, money comes from drug trade, and money obtained from terrorist activities and etc,) are in consideration.
Usually, the money laundering involves three steps
1. Placement - Which introduces the illegal money to the financial system by breaking down into smaller denominations.
2. Layering - Concealing the source of money through continuous complex transactions, which involves shipping and splitting up the money through various contact points
3. Integration - Taking the laundered money and using it to buy expensive assets through a legal process.
Hope, you understand the basic activities of money laundering. Let us discuss about how these money laundering activities are followed in cryptocurrency network.
How bitcoin can be used for money laundering?
In general, bitcoin is not the best way to launder money, cash is still the king. But people believe that bitcoin is the most secure way to launder money, but they have to understand blockchain tracks every bitcoin transaction. So it is not at all a simple task to do money laundering thorugh bitcoin. But some of its characteristics may give access to do such illegal activities. What are those characteristics?
1. It allows anonymity :
Bitcoin transactional procedures do not require any customer identification
2. Follows Decentralization:
There is no central bank who meditates and control the flow of bitcoin.
But the fact you have to understand is, there is very less illegal money in bitcoin ecosystem than traditional banking system.
What is Anti money laundering?
Anti money laundering commonly referred as AML which is a set of procedures, and laws are purposely designed to stop generating money through illegal activities.
It comprises of following three F's:
3. forfeiture the criminal assets
Integrate AML bitcoin transactions!
To prevent the illegal money laundering activities on your bitcoin exchange website,and to legalize your business, you have to integrate AML transactions with your website.
Why we have to integrate AML transactions?
1. You can set limit for bitcoin transactions, that is a person can't send or receive more than 'n' number of bitcoin at a time. so that you can stabilize the flow of bitcoin on your website.
2. Integrating AML law on your website can support you to run a legitimate bitocin exchange website. And you'll come a part of country's financial growth.
3. No need to fear about your website's ban.If you have integrated bitcoin wallet on your exchange you can implement the AML law on your bitcoin wallet too. (i.e) an account can't hold more than 'n' number of bitcoins.
Bitdeal as a bitcoin exchange software gives you a business solution to start an advanced bitcoin exchange website. The software is integrated with AML law and with advanced security, so we are giving a 100% guarantee for you to run a complete legal white label bitcoin exchange business website.
Get started with bitdeal!
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