TRM Labs (TRM) has successfully integrated its cryptocurrency compliance and risk management platform with the Hedera public ledger. Customers can leverage this integration in order to comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulatory requirements. Users benefit from analytics which enables them to monitor risk, detect financial crime which strengthens AML/CFT compliance on Hedera. Across all TRM solutions, there is support for Hedera’s native cryptocurrency, HBAR and the companies state that future assets issued on Hedera will receive similar such support.
“Governments require financial institutions to establish risk-based anti-money laundering programs. Fulfilling these requirements on public ledgers is extra challenging due to the evolving regulatory landscape, technologies, and threat actors,” said Esteban Castaño, co-founder and CEO of TRM Labs.
“By integrating with Hedera, we offer organizations building on the Hedera network the ability to prevent cryptocurrency fraud and financial crime, enabling our shared goal of building a safer financial system for billions of people.”
Adding the TRM dimension
TRM specialises in detecting and preventing fraud and financial crime on distributed ledgers. TRM works by:
- analysing billions of digital asset transactions in real-time
- detecting fraud and financial crime
- generating risk scores for relevant addresses, transactions and entities.
The cumulative effect is that enterprises and financial institutions can monitor, investigate, and report suspicious activity in real-time – which simplifies customer due diligence and satisfies regulatory requirements.
The TRM/Hedera network integration enables Hedera ecosystem members to:
- access Hedera network data within TRM
- leverage the TRM tools and technologies to comply with AML/CFT regulatory requirements.
“TRM’s cryptocurrency compliance and risk management solutions are utilized by leading financial institutions including major exchanges, brokerages, and payment companies across the US, Latin America, Asia, and Europe,” said Sam Brylski, Chief Compliance Officer for Hedera.
“We are pleased they now offer their robust compliance and risk management solutions to the wide set of developers and enterprises building mission-critical applications on the Hedera network, many of which must comply with an ever-changing global financial regulatory environment.”
TRM tools supported
The TRM tools which this Hedera Hashgraph integration supports include TRM:
- Transaction Monitoring – real-time risk scoring of cryptocurrency transactions for AML compliance
- Wallet Screening – proactive screening of cryptocurrency addresses for sanctions and AML compliance
- ‘Know-Your-VASP’ – risk profiles of ‘Virtual Asset Service Providers’ and digital asset businesses
- Forensics – Investigative tools to trace the source and destination of funds and link addresses to real-world entities.
“Hedera’s commitment to compliance was a key factor in our decision to join the Hedera Governing Council,” said Richard MacNamara, Legal Director at Zain Group. “As a member of the Hedera Legal and Regulatory Committee, it is encouraging to see TRM Labs adding the Hedera Network into its suite of compliance tools and an indication of the maturing of the ecosystem. Our prospective use cases rely on the ability to manage risk and we are confident we will be able to do that on the Hedera Network.”
Enterprise Times: what does this mean
TRM is a crypto compliance company. Its capabilities enable enterprises to detect fraud and financial crime. In turn, this improves business processes – by ensuring enterprises observe regulatory requirements. One result is that market participants can interact with Hedera’s blockchain network with confidence that compliance is happening.
The effect of this is that exchanges can list HBAR while using TRM Transaction Monitoring for their AML compliance. Similarly:
- asset issuers can mint and redeem tokens on Hedera, again exploiting TRM Transaction Monitoring Forensics for AML compliance
- custodians can store HBAR and use TRM Wallet Screening for sanctions compliance
- banks can provide services to enterprises using the Hedera network, with TRM “Know-Your-VASP” enabling due diligence
- regulators can monitor activity on the Hedera network (with TRM Forensics).
The net result is that this Hedera Hashgraph and TRM Labs integration provides a foundation for additional AML initiatives. These could, for example, include linking transactions across public DLTs and using Hedera as a high-throughput message queue to track assets across chains. The value for regulators may yet be substantial if enterprises sign up.