The best financial regulator in New York has advised banks to expand their use of blockchain analyzes in handling virtual currency.
The regulator was noted in a September 17 Industrial letter Sent to banks and foreign branches active in New York by the State can help the tools institutions to better manage risks with regard to money laundering, punishing violations and other illegal activities.
Superintendent Adrienne Harris from the Department of Financial Services said that the technology has proven effective for licensed virtual currency companies and must be considered by banks that are directly involved in digital assets or come across crypto activities through their customers.
For the first time, the Department issued guidelines on Blockchain Analytics in April 2022, aimed at companies that have virtual virtual licenses. Since then, Harris said, banks have demonstrated “increasing interest in and exposure to virtual currency” that justifies comparable guarantees.
The regulator has recommended that banks use blockchain analyzes to screen customer portfolios, to verify the origin of crypto-linked funds, to follow activity in the wider digital asset system and counterparties such as virtual assistants.
Banks are also encouraged to compare the expected versus actual activities, to develop risk assessments by weighing network -wide intelligence and the risks of the introduction of new virtual currency products.
The Department emphasized that the list of applications was not exhaustive and noted that checks had to be adapted to the risky appetite and activities of each bank. Harris urged institutions to regularly update compliance frameworks as the markets, customers and technologies evolve.
According to the notification:
“Emerging technologies introduce new and evolving threats that require new tools.”
It added that blockchain analysis can help banks to protect the financial system against threats, including terrorist financing and the evasion of sanctions.
The guidelines do not change the existing state or federal laws, but emphasizes how regulators encourage traditional banks to adopt the same risk-lying standards that have long been applicable to licensed crypto companies.
