The Bank for International Settlements (BIS) has unveiled a proposal for a new global framework to combat money laundering in the cryptocurrency sector, making use of the transparency of open, public blockchains. The plan, outlined in a study titled “An Approach to Anti–Money Laundering Compliance for Cryptocurrencies”, argues that conventional oversight methods—built around regulated intermediaries such as banks—are inadequate for decentralized networks.
Instead, the BIS suggests using blockchain’s permanent, public transaction records to assign a “compliance score” to each unit of cryptocurrency or to specific digital wallets. This score would reflect the transaction history of the asset and indicate its potential connection to illicit activity. High scores would mean funds have only passed through approved sources, while low scores would signal exposure to suspicious transactions. The system would distinguish between “clean” and “tainted” funds by tracing their movement through addresses on approved or blacklisted lists.
The need for new approaches has grown with the rising use of cryptocurrencies in criminal activity. In 2024, stablecoins overtook bitcoin as the leading vehicle for illicit crypto transactions, accounting for 63 percent of the total. The BIS proposal envisions applying the compliance scoring system primarily at “exit points”—banks and licensed exchanges that convert digital assets into traditional currencies. Under a strict model, only cryptocurrencies that have moved exclusively through fully KYC-verified wallets would be eligible for conversion into fiat money. More relaxed scenarios would limit restrictions to transactions directly linked to known illicit addresses, while middle-ground options could involve temporary blacklists or transaction limits based on compliance scores.
While acknowledging that criminals could attempt to bypass the system using mixers or unregulated exchanges, the BIS argues that mandatory due diligence at conversion points could significantly reduce the flow of illicit funds into the conventional banking system. The report also notes that specialized third-party compliance services could make implementation more affordable and accessible for users, while offering a clear indication of the legitimacy of funds.
