AML Wallet Screening: 2023 Guide
How to Check a Wallet for AML Compliance: A Concise Guide
Introduction
Regulators are tightening requirements for cryptocurrency circulation — non-compliance with AML/KYC standards can lead to frozen funds, fines, or reputational risks. This guide briefly explains how to quickly assess a wallet address and minimize risks.
Why Check a Wallet (Briefly)
- Asset protection: Interacting with an address linked to criminal activity can lead to frozen funds.
- Legal security: Transactions with sanctioned addresses entail legal consequences.
- Operational reliability: An exchange or service with poor compliance may restrict withdrawals.
What Is AML Screening
AML screening is an automated or manual check of an address for links to fraud, money laundering, sanctions, or known hacking operations. The goal is to identify clear risk markers before conducting a transaction.
Step-by-Step Verification
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Use basic tools
For initial verification, blockchain explorers and one comprehensive service are sufficient:- Etherscan/Arbiscan — for viewing history and related addresses.
- Chainalysis, Elliptic, or similar — for scoring and database cross-referencing.
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Review transaction history
Look for:- Frequent large inflows from little-known addresses.
- Links to mixers, known hacker addresses, or services with a dubious reputation.
- Recurring patterns typical of money laundering.
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Check against sanction and public databases
Check for OFAC compliance and local lists (e.g., KoFIU in specific jurisdictions). Many services do this automatically — simply confirm the results manually if there are doubts. -
Evaluate context and counterparty
If the address belongs to an exchange or service, check the platform's reputation and compliance level. Prioritize platforms with transparent AML/KYC policies.
Practical Checklist Before Transfer
- Quick history review in a blockchain explorer.
- Screening/scoring in one of the analytics services.
- Cross-referencing with sanction lists if suspicious tags are present.
- Separating assets between cold and hot wallets.
- Using exchanges with confirmed compliance and up-to-date KYC.
Conclusion
AML verification does not necessarily have to be long or complicated. A few simple steps — reviewing history, checking databases, and verifying the counterparty — significantly reduce the risk of frozen funds and legal issues. Incorporate this habit into your daily operations, especially when dealing with large amounts or new counterparties.