Tough new rules have recently been recommended by the Financial Action Task Force (FATF), which is an international money-laundering watchdog. A solution aimed at helping cryptocurrency firms meet these rules. The blockchain sleuthing firm CipherTrace will launch this. CipherTrace teaming with Shyft on a blockchain solution.
Shyft is a firm that develops blockchain-based identity and attestation platforms. CipherTrace is teaming up with this company on the initiative. While still maintaining user privacy, the firms say their project will enable compliance with the FATF “Travel Rule”.
The firms will build a ‘know-your-customer (KYC)’ and ‘anti-money laundering (AML)’ ecosystem “in which participating exchanges can securely transfer Proof of Knowledge without disclosing personally-identifying information.” This information was shared in an announcement in June after the FATF announced in late June that its recommendations on regulating cryptocurrencies for its 37 member countries had been finalized.
With a review set for June 2020, FATF gave member countries 12 months to adopt the guidelines. a controversial requirement that “virtual asset service providers,” including crypto exchanges, pass information about their customers to one another when transferring funds between firms are included in the new standards.
According to the release, crypto exchanges currently lack a compliant way to share KYC data. Also, alert other firms over suspicious activity.
CipherTrace teaming with Shyft on a blockchain solution. CipherTrace and Shyft will launch a pilot program to develop a “shared smart-contract and cryptographic access controls”. It will address that shortfall allowing cryptocurrency exchanges to manage access to users’ private details.
CipherTrace CEO Dave Jevans said:
“With cryptographically controlled privacy mechanisms, it is possible to have both anonymity and responsible disclosure of the source of funds for legitimate purposes such as criminal or terrorist investigations and AML compliance. Also, this is the direction that CipherTrace is working on for the future growth of cryptocurrencies globally. We believe that there are technological and regulatory solutions that can preserve privacy while enabling security and compliance.”
The firms said that the solution would only reveal identity information when “compelled to do so by legal authorities”. Their main goal is to maintain a “high level of privacy” while making KYC and AML “faster, more efficient and open.”