BASEL, Switzerland—The Bank for International Settlements (BIS) has outlined a new framework to strengthen anti-money laundering (AML) efforts in the cryptocurrency sector by using blockchain transaction histories to assign compliance scores to crypto addresses, Coin World reported.
The BIS bulletin says the system would help institutions—particularly off-ramps that convert cryptocurrency to fiat—assess the risk of specific wallet addresses or transactions by analyzing how closely a cryptoasset is linked to past or ongoing illicit activity using the public blockchain record.
Under the proposal, each crypto address would receive an AML score from 0 to 100, with higher scores indicating lower risk. The rating would help institutions decide whether to complete a transaction or block a flagged address. According to the bulletin, this approach could address the shortcomings of current AML methods, which often falter given the decentralized and pseudonymous nature of cryptocurrency transactions, Coin World said.
The BIS highlights that crypto exchanges, stablecoin issuers, and banks could adopt this framework by setting minimum AML compliance score thresholds for cashing out crypto assets. This would help prevent illicit funds from entering the traditional financial system. Institutions may vary in their tolerance for high-risk addresses based on their business models, jurisdictions, and regulatory environments. For example, a gift card seller might accept a lower AML score than a bank offering crypto investment products, Coin World explained.
“The proposed framework is not a universal compliance index but rather a ranking system, designed to reflect the risk profiles of different market participants. The scoring would be based on factors such as transaction monitoring, know-your-customer (KYC) procedures, and the frequency of audits and reporting activities. Institutions with higher scores could benefit from more favorable regulatory treatment, while those with lower scores may face increased scrutiny or restrictions,” Coin World said.