CipherTrace, a blockchain analytics company, has launched a new product called Armada that is designed to help banks detect risks associated with cryptocurrency exchanges.

US banks unknowingly process up to $2 billion in crypto money each year, with 8 out of 10 processing illegal money, according to Silicon Valley-based CipherTrace.

Yesterday, CipherTrace launched a new product designed to help banks address this issue and stay in compliance with anti-money laundering laws.

CipherTrace’s new product, called Armada, is designed to detect risks associated with digital asset providers (VASPs) and help banks avoid becoming an unintended participant in fraud and other criminal activities.

According to the company, which was initially funded by the US Department of Homeland Security, Armada uses machine learning algorithms and artificial intelligence, along with other technologies, to monitor crypto activity, identify evidence of illicit funds, and assign account numbers to encrypted names.

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Payment flows to and from VASPs, which include cryptocurrency exchanges, Bitcoin ATMs and some cryptocurrency users, are then exposed by associating routing and account numbers with VASPs.

stated Mr. John Jeffries, Chief Financial Analyst at CipherTrace:

The information collected on users as part of KYC aims to ensure that exchanges comply with all anti-money laundering and anti-terrorist financing requirements as well as inflict international sanctions.

Without collecting some information about the users, the trading platforms will not be able to decipher whether the criminal is using their coins to launder money.

CipherTrace’s new Armada product will provide data regarding financial activity on the dark web, including fraudulent investment operations and ransomware attacks, according to Catherine Wenes, director of product management at CipherTrace, who added:

This translates into a more accurate and comprehensive risk assessment of cryptocurrency regulators and providers for anti-money laundering which enables Armada to catch financial services institutions that may be obscuring their true nature through different names or hidden accounts.

While he told Jefferies that for now, banks will serve as a major customer base for Armada, as they tend to avoid risk with digital assets and offer more of their services to the crypto industry.

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CipherTrace currently provides blockchain analysis tools to more than 130 clients, including Binance, Galaxy Digital, and Rakuten.

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