A corporation that supports financial institutions against money-laundering controls has partnered with a bitcoin security firm to try to prevent vicious uses of the virtual currency, such as illegal drugs and terrorism. LexisNexis Risk Solutions said the new service it has established with London-based startup Elliptic would bring bank-grade AML controls to bitcoin transactions, making the virtual currency more inviting to those who might want to use it for legitimate transactions. LexisNexis Risk Solutions, part of multinational analytics firm RELX Group (REL.L), helps banks comply with AML regulation, using a database of 2.7 million global entities that could be involved in illicit transactions, such as those on sanctions and other watch-lists.
There is a shared that database with Elliptic, which monitors bitcoin transactions and can alert its clients – ranging from bitcoin exchanges to U.S. and European intelligence agencies – when money moves from bitcoin addresses that have been identified as bad actors. This is a step toward making it (bitcoin) more mainstream and more acceptable, said Thomas Brown, of LexisNexis Risk Solutions.
Bitcoin is a internet-based virtually currency that relies on complex algorithms to transfer money around rapidly and anonymously with no need for a central authority to process transactions. Many users, including those who want to get around capital controls and those who support a currency that is free from government control for ideological reasons. But this has also attracted criminals, such as drug dealers and arms traffickers. Today, if you see bitcoins transacting, you almost assume they’re from someone who wants to be off the grid, or they’re proceeds from illicit transactions,said Brown. Elliptic’s head of business development, Kevin Beardsley said, “the single biggest thing keeping mainstream financial services out of the (bitcoin) ecosystem is the inability to do bank-grade anti-money laundering controls”. The hope is that this will unlock a whole wave of companies being able to enter financial services with bitcoin.