This week FICO, a global analytics leader, and Crystal Blockchain of Bitfury Group, a digital currency analytics company, announced a partnership to provide cryptocurrency risk management and monitoring services. With an increasing number of financial service providers looking to expand services into the crypto market, the joint offering will help to protect new business models and effectively connect the worlds of virtual and fiat currency for the benefit of their customers.
Banks have been hesitant to engage in crypto business due to the complexity of tracing transactions and measuring risk on the blockchain in order to combat money laundering activities. Combining FICO’s industry-leading financial crime solutions with Crystal’s blockchain analysis, the joint offering will help banks assess the risk of their clients’ crypto business at the onboarding stage, as well as monitor that risk on all active accounts. This unique combination will enable banks to fully understand and actively manage the risk-exposure from customers – individuals and corporations alike – that engage in virtual currency transactions. With rigorous KYC and AML controls in place, banks can expand their service portfolio into the fast growing market of virtual assets, while managing crypto-related risks.
“Cryptocurrency services are an under-utilized market for many large banks, due to the crypto-related risks and lack of transactional intelligence available,” said Dr. Sebastian Hetzler, vice president of financial crimes product management, at FICO. “This partnership integrates FICO’s AI-powered financial crimes detection with Crystal Blockchain by Bitfury Group’s extensive blockchain analysis, providing financial institutions with an in-depth crypto-risk assessment of client activities and relationships.”
The partnership will feature an integration between FICO’s anti-financial crime solutions and Bitfury Group’s Crystal analysis. At the onboarding stage, banks will gather a potential client’s information including their virtual assets and wallets. FICO’s KYC solution will cross reference against the Crystal Blockchain analytics platform to obtain Crystal’s risk score, which is calculated based on the client’s transaction history with anonymous and deanonymized sources and links, and the bank specific risk model. Traditional KYC risk factors and the Crystal risk score become part of the initial risk assessment and may inform further due diligence.
Banks will also be able to apply the blockchain analysis to existing clients for ongoing monitoring in real-time. For instance, if the Crystal risk score changes due to nefarious crypto transactions or activities on the darknet, the bank will be alerted and can immediately start investigations. In FICO’s Alert and Case Manager (ACM), further details from Crystal’s blockchain analysis will be visualized in an interactive and powerful UI to support investigators’ decisions.
“At Crystal, we are committed to providing security and transparency in the cryptocurrency markets through top-class blockchain transaction analytics for AML and CFT. We provide high-quality risk-scoring mechanisms via predictive analytics and data science, along with entity monitoring to understand the provenance of funds,” said Marina Khaustova, CEO of Crystal Blockchain. “The crypto industry is relatively young and as the tech develops it has unique compliance requirements. So when it comes to anti-fraud operations it’s vital to combine the best practice of more mature financial industries with the knowledge amassed by crypto market experts. We look forward to working with FICO in our shared mission to make the global financial markets – be it real or virtual – more secure and trusted for banks, financial institutions, and their clients, by improving fraud identification and suspicious activity tracking on the blockchain.”
