A recent study by MetaComp, a major payment institution licenced by the Monetary Authority of Singapore, has highlighted significant vulnerabilities in the detection of financial crime risks within blockchain transactions. The research, focusing on stablecoin flows, analysed 7,000 transactions on Ethereum and Tron using four leading Know Your Transactions (KYT) tools: Chainalysis, Elliptic, Merkle Science, and Beosin. Findings revealed that up to 25% of high-risk transactions were not flagged when relying on only one or two KYT tools.
The study underscores the importance of a multilayered KYT approach for effective Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) compliance. Tin Pei Ling, Co-President of MetaComp, stated, “For institutions operating in a regulated environment, especially those dealing with stablecoin flows, it is no longer sufficient to rely on a single tool for transaction screening.”
MetaComp’s analysis demonstrated that a three-tool screening model significantly improves risk detection whilst maintaining processing speed, making it suitable for real-time environments. This approach reduced the false clean rate to below 0.10%, ensuring near-instant results. The study also identified systemic weaknesses, such as fragmented risk coverage and inconsistent risk categorisation, contributing to screening inconsistencies.
The research focused on USDT and USDC stablecoins, given their prominence in institutional use cases. MetaComp recommends using at least three KYT tools per transaction to balance AML/CFT effectiveness, cost, and processing efficiency. The study’s findings aim to elevate industry standards for on-chain risk monitoring and support the development of a more trusted digital finance environment.
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