AML Bitcoin Check: Why is It Needed?

Checking the purity of bitcoin is important when the coins come from places that could be dangerous. Crypto exchanges with Know Your Customer (KYC) are the safest because it is likely that you can withdraw pure cryptocurrency from them. However, everything is much riskier with exchangers, private transfers, and bitcoin mixers.

Why Should You Do This?

“Dirty” bitcoins were used in illegal activities like hacker attacks, buying or selling illegal goods or services, funding terrorism, or laundering money.

Many people still think that, as it was first said, Bitcoin gives users complete privacy and anonymity. Of course, wallets can be used in some ways without being traced (do not require registration or verification to use). But the public blockchain keeps track of all transactions. Bitcoin is a completely open system, and the technology that keeps track of and analyzes payments is getting better and better all the time. So, if a bad transaction is found, like money being stolen from an exchange, it is easy for exchanges and other platforms to put these assets on a blacklist.

What will happen if you get these coins?

• You won’t be able to trade it on exchanges that people trust. After an AML (anti-money laundering) check, the platform will figure out where the money came from illegally and block it.
• Most likely, the account will also be blocked along with the cryptocurrency. You are going to have a trial where you will have to show that you are not involved in any illegal schemes.
• Even if you didn’t know what was wrong, there is a good chance that you will get fined for using dirty coins.

That’s why it’s so important to make sure the cryptocurrency is clean and not used for anything illegal.

Where do coins get dirty?

Most of the time, you can:

Getting drugs or other illegal goods on the black market, laundering money through cryptocurrency, and stealing from exchanges, wallets, and other platforms.

AML services, which can be stand-alone or built into exchanges or other software, look for cryptocurrency assets like these. Many AML systems offer services that are tailored to the business, so that the API can do the verification on its own. At the same time, extra care is taken with the cryptocurrency that comes from bitcoin mixers or crypto exchanges that are not regulated.

In May 2021, the mining company Marathon announced that it had mined the first Bitcoin block in history that followed all US rules. The company used technology that kept it from processing transactions that involved assets that had been “marked as dirty.” Marathon is not the most important miner in the world, but this move shows that he is a leader in the way Bitcoin and global AML rules will work together in the future.

By the way, no matter who mines them, the coins that are made by the network during the mining process are always clear.

Here are some tips from experts on how to avoid dirty BTC:

• Don’t use bitcoin mixers or other services like them. Most of the time, mixers are used when the cryptocurrency comes from the dark web or is clearly linked to illegal activities. Normal users don’t need to do this.
• Get two wallets. One will have coins you know are safe, and the other will have coins you’re not sure about. So, you’ll know which wallet can send coins to exchanges safely.
• Only trade on exchanges that are regulated and have KYC checks. So you can be sure that the people you are trading with are also honest and have proven who they are.

And finally, you can use special software to check whether bitcoin is real or not. It quickly looks at a transaction’s history and checks the databases to see if the money was used for something illegal.

The Bottom Line

At first glance, it might look like all BTC are the same and can’t be different since Bitcoin can be used anywhere. In a strict sense, this is true. But if you look at it from a different angle, the way you get one coin or another does make a difference.

Bitcoins that can’t be traded on a good exchange are called “dirty.” On some services that are not regulated are sometimes sold at a discount. On the other hand, some people are willing to pay more for very clear BTC, such as BTC that was just mined. It turns out that where Bitcoin came from can change how much it’s worth. In one way or another, having dirty coins doesn’t help anyone, and checking the purity of bitcoin is a real thing that all types of users do.