Reply To: I am curious to know how blockchain technology may streamline KYC and AML procedures in the trade finance sector. Can somebody provide instances or describe how this operates in the real world? Are blockchain-based systems or solutions being utilized in this industry? Any insights or information would be highly appreciated.

[Raabiya Issac]

The estimated annual amount of worldwide money laundering is approximately 2 trillion dollars. Terrorist financiers and criminal organizations exploit a wide range of threats and vulnerabilities within the international trade system. The colossal volume of world trade, in return, distorts transaction data. The complexities of utilizing various currency transactions and diversified trade finance structures partly contribute to these difficulties.

Numerous banks invest between $900 million and $1.3 billion yearly to strengthen and operate their AML and KYC systems. In addition to the significant expenses of KYC/AML compliance, banking institutions are under constant client demand to enable transactions efficiently. Under money laundering, digital financial crimes have also utilized modern technologies.

A blockchain-enabled AML/KYC platform can expedite AML/KYC processes by storing KYC and AML-related data and information on a distributed ledger. The information stored on a blockchain ledger is immutable and always accessible to all network participants. Consequently, handling AML/KYC data on the blockchain can assist financial institutions with data maintenance.