AML Crypto is the third recipient of Everscale Grants. It is an advanced cloud-based solution for analysing the origin of funds on a crypto wallet, available as a subscription service for financial providers and institutions. The cryptocurrency space is often referred to as being a notorious safe haven for unregulated financial activity. All crypto exchanges have to follow regulations and policies designed to prevent this activity, so they have to check all addresses and incoming transactions. If they don’t care about transparency, they end up receiving a lot of dirty funds and getting blocked by regulators. Thus, it’s natural that all legal exchanges and financial companies require tools for analysing every blockchain they integrate. Since AML Crypto works with Everscale, gathering all crucial data and increasing its transparency, it opens the way to new listings on high-profile exchanges. Hence, AML Crypto is one of the most important projects for the development of the ecosystem.
How does it work?
AML Crypto works as an aggregator of all Everscale-related data on the Internet. Its machine-learning algorithms analyse various message boards, social networks, websites, Telegram chats, even the Darknet, and find all Everscale addresses, matching them with users. It creates a map of the whole blockchain, finding patterns, marking addresses and classifying them into several categories. Every address gets its own Risk score, based on its activities and incoming and outgoing transactions. Receiving funds from blacklisted addresses and participating in gambling and other suspicious activities decreases the Risk Score very drastically. However, it’s up to each client to determine whether they want to accept gambling-related funds or not. In each case, it depends on the jurisdiction.
“The Risk Score is an indicator of the presence of risky funds for a particular user. The need for this service arose a long time ago, since there are already many cases on record when participants in transactions became victims of certain fraudulent schemes and, as a result, lost their funds. These incidents were reported to various crypto exchanges, but, unfortunately, they were not always able to make decisions and respond to incidents in a timely manner. Therefore, in order for them to respond promptly, a risk indicator is needed.” — AML Crypto Team
The diagram above visualizes the process of analysing the behaviour of each individual wallet address on the network. Neural networks enrich the database with data from various systems, including the entire history of transactions, as well as behavioural habits of users on the network, which, accordingly, makes it possible to determine a more holistic Risk Score.
One of the future updates will include the dynamic scoring feature. Every AML Crypto client will be able to determine risk tolerance and the minimum Risk Score for accepting funds.
Advantages
If we consider blockchains and cryptocurrency, then the volume of illegal transactions or transactions related to criminal activity in this sphere in 2021 alone amounted to about $14 billion.
AML Crypto makes it possible to avoid such enormous losses in the future by analysing all available media tools, from instant messaging services to websites visited by individual users. A more detailed idea of a particular user is formed and their behaviour is evaluated in terms of the legitimacy of transactions. AML Crypto makes Everscale even more transparent, and this automatically moves the network into a higher league.
The service interface is constantly being improved. The team is in touch with business users who actively provide feedback on what they would like to improve in the system interface. In comparison with its competitors, AML Crypto provides much more detailed information and is cheaper so far. Currently, AML Crypto only supports Everscale, but soon it will also include support of Polkadot, Binance, Solana, Avalanche, Cosmos and Near.
Criteria indicating that a transaction is suspicious
As we mentioned earlier, the main function of the AML project is to identify suspicious transactions. Let’s figure out what indicates a transaction’s illegality. The most reliable indicator that a transaction is suspicious is a specific incident.
Let’s take a look at the following example:
Let’s say a person has said that due to some fraudulent actions on the other side, they have lost funds. The person gives a certain evidentiary basis, based on which this incident is studied. This way, a list of wallets that fraudulently received a very small fraction of funds is formed. Further, the AML Crypto team carefully monitors all transactions: whether this crypto wallet was used somewhere else, whether a Telegram account or a forum account was used in any other situations and what other wallets belong to this user, which enables the team to identify the person behind it.
How AML Crypto technologies are implemented on Everscale and its benefits for Everscale
From the point of view of business end-users, the solution is based on graph relationships that make it possible to identify the flow of funds.
From the inside, it looks like this:
Each circle represents the address of a wallet. All wallets are interconnected by transaction data. They interact with each other by either one-way or two-way connections. All wallets are marked by certain types. Accordingly, each transaction has a particular date of its implementation and corresponding rates, which allow users to switch them between EVER and USDT.
This filter allows you to conduct very flexible analysis in terms of the periods when transactions happened, the types of wallets with which this wallet interacted, amounts and so on.
As regards scoring, then at the output, users receive a figure in the form of a percentage of risky funds in the context of one wallet. We can check:
- All incoming transactions to each wallet;
- the date of wallet creation;
- distribution of funds;
- origin of funds;
- contests in which the owner participated,
- related wallets;
- balance changes;
- risk indicators.
We possess information on all transactions and addresses. This is enriched by third-party data, which enables us to analyse the behaviour of each address. In some cases, we are thus able to learn about the owner’s activity in forums and Telegram groups and, by extension, find out who the owner is.
In working with Everscale, AML Crypto thus provides the analytical data to completely cover all addresses created on the basis of the blockchain system, along with all transactions made, regardless of their scale.
With a tool that simplifies the risk scoring of addresses, it will be possible to be listed on exchanges, which, in turn, will be able to confidently accept the EVER token without any fear of legal problems. This should increase the transparency of the blockchain and the adoption of Everscale.
Everscale grants — the purpose of the grant request
The project will receive a grant from Everscale of 300,000 EVER paid for the first milestone. The whole grant consists of four tranches upon completion of certain milestones and the full release of the product. This will compensate only a small fraction of the expenses of the project, which is crucial for new Everscale listings and integrations. Overall, AML Crypto is well funded from other sources.
Summary
AML Crypto is a fast-growing project that analyses all available media tools, from messengers to sites visited by individual users, in order to assign a Risk Score to every address. Thanks to the technology and application of the proposed tools, the number of fraudulent transactions and theft can be significantly reduced. This is advantageous both for the project itself and for Everscale.
There has been no official release for exchange clients yet; the full release is expected in Q2 2022. Currently, AML Crypto is being used by a number of initial members: Broxus, EverX and Everscale DeFi Alliance. The project has every chance of becoming one of the top solutions on the international market and competing on an equal footing with the likes of Chainalysis, Elliptic, Coinfirm and Nota Bene.
Important: There is a feedback form created by the AML Crypto team on its website for any users who wish to contact them to investigate particular incidents. The team pledges to look into each situation to determine if it was theft or hacking. We must note that reporting a particular incident does not mean that the stolen funds will be returned. However, this is a great opportunity to expand the knowledge in the algorithms for searching for intruders and engage together in order to improve the crypto space.
