Regulators have long said that digital assets are a popular way for bad actors to commit financial crime and fraud. These crimes include money laundering, sanctions evasions, and ransomware payments. It is no surprise that KYC, sanctions, and AML compliance are top priorities for lawmakers. That’s where geolocation compliance comes in.
Criminals will do all they can to avoid getting caught by hiding their identity and location online. They often do this by altering their Internet Protocol (IP) addresses to fake their location. IP addresses are easy to spoof using tools such as virtual private networks (VPNs) and proxies.
Lawmakers have recently identified certain types of IP addresses – such as those linked to VPNs and proxies – as a red flag. These red flags are indicators that bad actors who use crypto may be changing their IP addresses to evade sanctions.
Fortify Sanctions and AML Regulatory Compliance with Geolocation Tools
Agencies such as the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) now recommends geolocation tools for crypto companies. OFAC noted: “Virtual currency companies with strong sanctions compliance programs should be able to use geolocation tools to identify and prevent IP addresses that originate in sanctioned jurisdictions from accessing a company’s website and services for activity that is prohibited by OFAC’s regulations.”
To learn more, check out the infographic below. You’ll:
- See how quickly countries around the world are either banning crypto or applying AML and CFT laws to digital assets.
- Understand why IP addresses miss the mark on sanctions and AML regulatory compliance.
- Review our timeline to see how regulators identify the risks that IP addresses create and why they prefer geolocation tools.
