Identifying Money Laundering on the Blockchain
Funded by Innovate UK CyberASAP Y9 Phase 1 and 2
Public Description
As financial crime becomes increasingly sophisticated, traditional anti-money laundering (AML) and counter-terrorist financing (CFT) systems struggle to keep pace, particularly in decentralized finance (DeFi) and blockchain transactions. This project aims to enhance the UK’s cybersecurity framework by developing an advanced detection system that strengthens financial crime prevention in digital asset markets.
Our approach combines real-time fund tracing, AI & machine learning, and transaction analysis techniques to detect suspicious activity with greater accuracy and efficiency. Unlike traditional systems that may be bypassed by evolving criminal tactics, our solution adapts to new laundering strategies, reducing false positives and improving overall detection effectiveness. Our solution’s key innovations directly target critical weaknesses in traditional AML systems. By monitoring cross-chain transactions, we address a notorious industry blind spot, providing a more complete view of fund flows. Furthermore, our use of Large Language Models (LLMs) delivers explainable, human-readable results that articulate the specific risks of a transaction. This empowers compliance teams to make faster, more confident decisions, significantly improving the ability of financial institutions, cryptocurrency exchanges, and regulatory bodies to meet stringent obligations, such as those mandated by the Financial Conduct Authority (FCA).
By offering automated, scalable AML tools, this project enhances the resilience of the UK’s financial infrastructure against cyber-enabled financial crime. It directly supports the UK government’s priorities on cyber resilience and financial security by preventing illicit transactions that fund terrorism, organized crime, and fraud. Additionally, by improving compliance with FCA and GDPR regulations, it helps UK-based exchanges secure regulatory approval and maintain operational trust.
In the long term, this project will strengthen the UK’s position as a global leader in secure, compliant digital finance. By integrating innovative AML technology into the country’s cybersecurity ecosystem, we contribute to ensuring financial stability, regulatory compliance, and trust in digital financial services, ultimately promoting a safer and more transparent financial landscape.