In a Joint Statement on Crypto-Asset Risks to Banking Organizations, the regulatory agencies stated that their examiners will focus on risk assessments relating to crypto custody services and other distributed-ledger technology products and services. Your AML risk assessment must be enhanced to include a thorough analysis of crypto risk within your financial institutions, along with all mitigating factors. How To Avoid Crypto Fraud: Protecting Your Clients The good news? Financial institutions aren’t powerless. They can help protect consumers and fight back against fraud. Here’s what financial institutions can do: • Invest in fraud detection software like Abrigo’s AML software solutions, which flag suspicious activity and alert the client of potential fraud. • Monitor unusual transactions, such as large transfers to high-risk regions or activity on less reputable digital currency exchanges. • Conduct regular staff training to recognize red flags and respond quickly. • Engage your customers with educational resources to empower them against scams. • Employ customizable rules that are tailored to your institution’s specific risk profile, including monitoring senior accounts or transactions involving privacy coins. Conclusion: The Future of Crypto Fraud The threat of crypto scams underscores the need for constant vigilance. Whether it’s investment opportunities that seem too good to be true or the peculiar urgency of a stranger’s request for crypto, recognizing the red flags can help prevent falling victim to crypto fraud. With the right tools and proactive strategies, you can protect your clients — and your reputation — from these emerging threats. Crypto is most likely here to stay, and so is the fight against fraud. Fraud detection can be resource-intensive, but with Abrigo’s “human-in-the-loop” approach, the technology works alongside investigators, streamlining efforts and ensuring critical cases get the attention they deserve. Together, financial institutions and consumers can navigate this threat and build a safer investment future for everyone. Terri Luttrell is a seasoned AML professional, former director and AML/OFAC officer with over 20 years in the banking industry, working in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size. 13 In Touch
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