Elliptic, a provider of bitcoin blockchain intelligence, in partnership with California-based Silvergate Bank, is working on a program in order to analyze as well as screen possible fraudulent activity on the bitcoin blockchain, CoinDesk reported.
The program helps banks in accessing future bitcoin-based business clients. According to James Smith, Elliptic's CEO, those banks working with bitcoin companies do not have much visibility on how effectively they are at handling the risk associated with bitcoin transactions.
“Until now, they pretty much have had to rely on the word of the exchange or whoever [processed the transaction] to say 'We’re doing the best we can,” he told CoinDesk. "We see this as a great step forward in terms of raising the industry standard, in terms of compliance, improving the level of risk mitigation and, ultimately, allowing Silvergate to work with more businesses who are handling bitcoin.”
With the platform, banks will be able to find suspicious bitcoin activity that will allow them to reduce risk assessment costs for potential customers, at the same time demonstrating to regulators about the internal safeguards to weed out bad actors.
Silvergate at present offers services to over 30 bitcoin-related companies, including digital currency exchanges, institutional investors, miners and software developers. The platform is similar to Elliptic's other anti-money laundering products and screens every blockchain transaction for linkages to suspicious activity and then issues each with a risk score.
“What we’re looking for is to see how a client is performing over time as an indication of whether their internal control environment is getting stronger,” Ben Reynolds, vice president of business development and digital banking at Silvergate, said.
