Deconstructing on-chain analytics: how AML checks reveal dirty crypto wallets based on a real-life case study
In the world of cryptocurrencies, every transfer is a footprint in the digital
sand. But what if that footprint leads to "dirty" money? On-chain analytics
allows for uncovering hidden connections, identifying risks, and protecting your
assets. In this article, we will examine a real-life case study: how an AML
crypto wallet check revealed a connection to the sanctioned mixer, Tornado Cash.
If you are a newcomer to crypto, especially in P2P trading, this read will help
you understand why ignoring AML risks is dangerous.
Check crypto wallet in Free AML — fast and
free
What Is an AML Check and Why It Matters for Crypto Beginners
An AML check (on-chain analytics) is the analysis of data directly from the
blockchain. Imagine every wallet and every transaction as a page in an open
book. Analysts use tools to read this book and identify suspicious patterns.
This is especially relevant for beginner traders: in P2P trading on platforms
like Binance or LocalBitcoins, you often receive funds from strangers. Without a
risk check, you might accidentally "taint" your wallet and face a block on the
exchange.
Unlike traditional banks, where AML (Anti-Money Laundering) is often synonymous
with bureaucracy, in crypto, everything is simpler and faster. Services like
Free AML allow you to conduct a cryptocurrency wallet risk analysis in seconds,
without registration and for free. It is not a luxury, but a necessity for safe
trading.
Main Sources of AML Risks in Crypto
Before diving into the case study, let’s recall the key threats:
- Mixers and Tumblers: Anonymization tools like Tornado Cash. They mix
"clean" and "dirty" coins, making tracking difficult. However, connections are
still visible. - Hacks and Exploits: Funds from stolen DeFi protocols are often laundered
through chains of wallets. - Sanctioned Addresses: Wallets associated with OFAC or other regulators.
- Phishing and Scams: Wallets involved in fraudulent schemes.
If your wallet touches such addresses, the risk skyrockets. A free AML check
helps identify this in advance.
Patient Under the Microscope: A Real AML Check Case Study
Now, let’s move to the "dissection." We will take an anonymized Ethereum address
(let’s call it "Address X") that received 2.3 ETH. At first glance, it looks
like a routine transaction. However, our AML system at Free AML assigned it an
85% risk score. Why? Let’s break it down step by step.
Step 1: Identifying the Source of Funds
It all starts with the transaction chain. In the Ethereum blockchain, every
operation is public, and tools like Etherscan or advanced AML services allow for
visualizing the money’s path.
In our case:
- Node A: Source — a wallet potentially linked to a DeFi hack (anonymized
for the example). - Node B: Funds pass through Tornado Cash — a decentralized mixer blocked by
OFAC in 2022 for laundering billions of dollars. - Node C: An intermediate wallet where "laundered" ETH is distributed.
- Node D (Address X): The final recipient.
The connection is not direct but indirect — through one "hop." For AML purposes,
this is enough: "toxicity" is transmitted like a virus. Free AML uses sanctions
databases and connection graphs to identify such chains instantly.
Step 2: Behavioral Analysis of the Counterparty
Next, we look at the sender’s behavior (Node C). Here is a table of
observations:
| Feature | Observation | What it means |
|---|---|---|
| Wallet age | 2 hours | New addresses are a red flag for disposable laundering schemes. |
| Transaction count | 1 incoming, 5 outgoing | A "distributor" pattern: receives and scatters funds. |
| Balance | Almost zero | Not for storage, but for transit — a sign of automation. |
| Timing | All within 15 minutes | A script, not manual human actions. |
This screams suspicious. In Free AML, behavioral analysis is built in: the
system scans thousands of metrics to confirm risks.
Step 3: Cluster Analysis — Who Are Your "Neighbors"?
Clustering is the grouping of addresses based on indirect signs (gas, timing,
patterns). In this case:
- "Address X" is in a cluster of 9 wallets.
- 7 of them are connected to Tornado Cash.
- 2 interacted with phishing DeFi protocols.
This confirms: Address X is part of a laundering network. Free AML supports
clustering in networks like ERC-20, TRC-20, BSC, and others.
Step 4: Final Risk Calculation
The AML system weighs the factors:
| Category | Factor | Weight |
|---|---|---|
| Mixer connection | Indirect (via 1 hop) | +60% |
| Behavioral anomalies | Yes | +15% |
| Cluster reputation | Negative | +10% |
| Others (sanctions, history) | Partial | +0% |
Total: 85% — High Risk. This is not an accusation, but a signal: be careful.
How Free AML’s Check Works
Let’s look at the technical "under the hood" of Free AML — this will help you
understand why our service is a leader in risk analysis.
Technical Foundations
Free AML uses APIs from blockchain explorers (Etherscan, Tronscan, etc.) and
proprietary risk databases. Supported networks: TRC-20 (USDT on Tron), ERC-20
(Ethereum), BSC (Binance Smart Chain), Arbitrum, Polygon, and others — over 10
in total.
Process:
- Address input: The user enters a wallet address (e.g., 0x… for ETH).
- Data collection: The system scans transactions, balances, and
connections. - Analysis: Graph algorithms identify chains (BFS/DFS for graphs).
- Risk scoring: Machine learning assigns scores based on models
(e.g., Random Forest). - Report: Within seconds — the risk level and connection details are
provided.
Advantages:
- Free: No hidden fees.
- No registration: Anonymous.
- Speed: A few seconds thanks to caching and cloud computing.
Unlike paid services, Free AML focuses on simplicity for beginners.
Why Free AML Is Better Than Analogues
- Full support for P2P risks: ideal for traders in Russia and the CIS.
- Sanctions integration: OFAC, EU, Rosfinmonitoring.
- Real-time updates: risk databases are updated daily.
Consequences of High AML Risk and How to Avoid Them
For the owner of "Address X":
- Deposit blocking on the exchange.
- Account freezing.
- Legal issues (in Russia — under Federal Law 174-FZ on money laundering).
Prevention: check the sender before P2P. Free AML is your tool.
Conclusions: On-Chain Analytics as a Security Tool
This case shows: the blockchain is transparent, but the risks are real. Do not
ignore AML — check your wallets. Free AML makes it simple and free.
Check crypto wallet in Free AML — fast and
free
FAQ: Frequently Asked Questions About Crypto Wallet AML Checks
What is a crypto wallet AML check?
An AML check is an anti-money laundering analysis. It identifies connections to
mixers, hacks, and sanctions. In the article
"What is an AML check in cryptocurrencies and how to protect your assets",
we have detailed this issue further.
How to perform a free AML check online?
On the Free AML page. Get results in
seconds without registration. If you still have questions, you can find answers
here:
"Step-by-step guide: How to check a crypto wallet for cleanliness before a deal?".
Why is Tornado Cash dangerous for crypto?
It is a mixer under OFAC sanctions. A connection to it is a red flag for
exchanges. For information on other risk sources, refer to the article
"Top 5 risk sources for your crypto wallet: Mixers, darknet, and phishing".
Does Free AML support TRC-20 transaction checks?
Yes, plus ERC-20, BSC, Arbitrum, Polygon, and others.
AML transaction check services: Free AML vs others
Free AML is free and fast. Analogues
(Crystal,
Chainalysis) are paid services intended for
businesses.