Enhancing Compliance and Security: The Need for Crypto Transaction Monitoring Solutions

Strengthen compliance, mitigate risks, and build trust in the blockchain industry through crypto transaction monitoring

Published on July 6, 2023
Last Updated on October 23, 2023

The world of cryptocurrency has had its fair share of challenges that have affected its reputation. In fact, fraudulent activities such as scams, Ponzi schemes, and phishing attacks caused crypto companies to lose approximately $2.7 billion in revenue. In addition, ransomware attacks have become more common, which makes it difficult to trace and recover stolen funds. 

However, the rules governing cryptocurrencies are unclear and vary from country to country. Since there is no international consensus on the best approach to regulating crypto, organizations handling digital assets must monitor their transactions and submit reports on any suspicious activity (SARs). This increases the importance of complying with regulations for anti-money laundering (AML) and Know-Your-Customer (KYC) in order to avoid penalties and damage to one's reputation.

To combat these issues, companies in the crypto industry need to start using crypto transaction monitoring solutions. This will help detect and reduce risks associated with scams, ransomware attacks, and compliance violations. In this article, we'll dive into cryptocurrency transaction monitoring, discover its benefits, and learn how to implement it successfully.

Crypto Transaction Monitoring: A Deep Dive

Cryptocurrency transaction monitoring involves systematic tracking and analysis of blockchain transactions to detect and mitigate risks such as illicit activity, fraud, and compliance violations. It's important to monitor transactions in cryptocurrency services because criminals can use them to hide their identities and transfer funds between accounts quickly and anonymously. For instance, financial and cryptocurrency service providers must enhance their AML transaction monitoring systems and measures to prevent money laundering and enhance their risk management capabilities.

Here are some of the best practices for effective blockchain transaction monitoring:

Real-Time Monitoring and Suspicious Activity Reporting

It is absolutely essential to have robust real-time monitoring at the deposit/purchase and exchange/payment stages together with clear, effective protocols for reporting and investigating any suspicious activity. By utilizing automated tools and systems that continuously monitor transactions, direct or indirect connections with sanctioned or high-risk wallets are carefully monitored and flagged. Additionally, it is crucial to establish protocols that actively encourage employees to report any suspicious transactions they encounter. With timely reporting and swift investigation, you can protect your business’s reputation and prevent significant financial losses, stay ahead of any potential threats, and maintain the highest possible levels of security.

Advanced Analytics

With the help of algorithms that analyze transaction patterns, you can easily detect and flag any potentially fraudulent or suspicious activities. These tools are particularly useful in identifying anomalies that may be difficult to spot through manual inspection alone. Patterns of money flow between crypto wallets can be spotted by using advanced analytics, you can gain actionable insights that will help you make informed decisions and improve your risk mitigation and blockchain monitoring strategies.

Compliance Integration, Data Privacy and Security

In order to comply with regulations and industry standards, businesses need to incorporate crypto transaction monitoring systems with strong compliance frameworks. This involves aligning monitoring practices with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. The Financial Action Task Force (FATF) has provided a list of red flag indicators to aid in improving your transaction monitoring systems. By integrating compliance measures into your systems, you can reduce the risk of non-compliance and penalties, all while maintaining the integrity of your operations.

Risk-Based Approach

In monitoring transactions and entities, it is crucial to consider factors such as transaction volume, frequency, geographical location, and counterparty profiles. By prioritizing high-risk areas, you can efficiently allocate monitoring resources and mitigate potential threats more effectively. This approach allows you to optimize resource allocation while enhancing overall security.

However, the complex and resource-intensive nature of blockchain transaction monitoring can pose challenges for crypto companies. This is why many companies are turning to third-party experts for assistance.

Outsourcing crypto transaction monitoring offers several benefits:


One way to save costs is by leveraging service providers' technology and expertise rather than building and maintaining your own monitoring infrastructure. This approach is more cost-effective and can help you better allocate resources.

Access to Advanced Technology

Partnering with external specialists instantly provides your business with cutting-edge tools, software, and analytics platforms that would also be costly when done in-house. As a result, you can confidently stay abreast of the latest technological breakthroughs and promptly detect and mitigate emerging risks.

Availability of Specialized Talent and Expertise

Third-party specialists with years of expertise will offer valuable insights to your business. With their in-depth knowledge of the industry, compliance frameworks, data analysis, and regulatory requirements, you will benefit from improved risk management and better regulatory compliance.

Scalability and Flexibility

Utilizing third-party experts is the key to achieving adaptability and scalability in blockchain transaction monitoring processes. This enables you to easily adjust to changing business needs, transaction volumes, and regulatory environments. You can ensure that their monitoring efforts stay up-to-date with evolving demands and consistently achieve optimal results.

Focus on Core Competencies

Outsourcing some workflows and processes to experts can significantly enhance your company's operations, efficiency, and resource allocation. This allows you to focus on core competencies and strategic priorities while taking advantage of comprehensive monitoring capabilities that add more value to crucial areas of your business.

cryptocurrency transaction monitoring

Mitigate Risks with Us

TaskUs partners with more than 25 FinTech companies, providing specialized solutions for the unique challenges faced by crypto industry players. Our team of certified professionals are experts in blockchain technology, data analysis, and compliance frameworks, ensuring that our transaction monitoring services are of the highest quality. We efficiently detect and mitigate risks such as fraud, money laundering, and compliance violations by combining advanced GenerativeAI technology and human-in-the-loop. Our main objective is to enhance our clients' risk management capabilities and ensure regulatory compliance.

For instance, one of our clients, an American cryptocurrency company, was expanding its services and experiencing growing customer demand. They needed a fraud prevention team to handle the following lines of business:

  • Identity (ID) Operations to deal with account-related issues, potential monetary loss, and account safety
  • Policy Ops to focus on compliance-related issues concerning underage users, sanctioned location or users, death of account holder, legal name, and Know Your Customer (KYC) & Identity Verification (IDV)
  • Manual Account Recoveries (MAR) to make decisions on account recovery requests submitted by the customer, validate ID verification documents and real-time self-identification, and check other suspicious activities
  • Account Takeover (ATO) Labeling to examine account takeovers with the help of machine learning

With a primary focus on quality and by implementing a rigid approach to training, we delivered the following results:

  • 69% increase in resolved cases within a month
  • 52% increase in accuracy, 5% higher than the target score
  • 86.67% productivity score, almost doubling since the start of the campaign
  • 13% increase in customer satisfaction within 3 months


Fraud Prevention and Transaction Monitoring for A Cryptocurrency Exchange

Read the Full Case Study

Recognized by the Everest Group as the World's Fastest Business Process (Outsourcing) Service Provider and as a Major Contender in Financial Crime and Compliance (FCC) Operations – Services PEAK Matrix® Assessment in 2022, TaskUs is here to address your transaction monitoring requirements. Contact Us today to learn how we can help your organization establish robust monitoring processes, implement best practices, and stay ahead of evolving regulatory requirements.

Secure transactions on your platform.


Surekha Nagpal
Senior Director, Financial Crime & Risk
Surekha has 20+ years of experience across financial crime compliance, business transformation, operations and talent acquisition. She drives aspects of the go-to-market strategy, social media engagement, and strategic initiatives.