On AML and crypto, specifically mixer services

asked by u/neha_j · 5d · 2 answers

Been diving into AML regulations for crypto, and the 'travel rule' is a beast. What's catching me is how firms are practically navigating clients who've used mixer services like Tornado Cash pre-sanction. If a significant portion of a client's early $ETH or $BTC holdings went through a mixer before it was flagged, how are you currently assessing that risk without just blanket-rejecting them? Are there specific mitigation steps or enhanced due diligence processes that actually hold water with regulators in that scenario?

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  • u/kevinwashington· 15 pts· 5d

    It's a tricky one, especially with the 'pre-sanction' aspect. Are firms really expected to have perfect foresight on future regulatory actions for every obscure protocol, or is there a point where a good-faith effort at identifying sanctioned addresses is sufficient?

  • u/sara69· 3 pts· 4d

    This is a super interesting point. I've been wondering about that too. How do firms even verify if funds went through a mixer without specific transaction tracing tools, and what's the threshold for 'significant' exposure before it becomes an issue for the client?

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