In a filing with the US Patent and Trademark Office, analytics company FICO has submitted an application regarding a system for detecting unusual transactions. With the rise of cryptocurrencies and anonymous ways to move money between individuals, tracking money laundering and other financial crime has become much more difficult.
FICO is seeking to collect publicly available information from cryptocurrency exchange sites as well as miners to track the flow of digital currencies. In the patent application, FICO details that the company would like to create "a Cloud based data store integrates information from multiple sources, including: a) Entities associated with legal and illicit BitCoin exchanges b) Entities associated with mobile payment and remittance networks".
The size and scale of how rampant money laundering truly is within the realm of digital currencies is largely unknown due to its somewhat anonymous nature, but FICO is hoping to reveal some clues to help quantify the problem. The introduction of privacy focused currencies such as Monero makes it theoretically impossible to track any money transfers using a public ledger. Monero can then be traded for more common cryptocurrencies such as Bitcoin so that the funds can be spent or turned into cash.
One of the largest issues with cryptocurrencies with respect to money laundering is that there is no way to simply shut one down even if it is known that illegal activity is occuring. Cryptocurrencies have thousands of node computers globally that handle synchronizing network transactions and keep all users up to date with the latest blockchain data. Proving ownership of digital currencies is extremely difficult when encryption and other safeguards are in place, making legal action difficult to carry out.
FICO may not be able to solve the issue of cryptocurrency-related fraud, but there is still plenty of time for the development of blockchain technologies to help reduce illegal uses.