Crypto Compliance Programs Must Adapt to Reduce False Positives

AML false positives are a significant challenge for digital asset compliance programs, causing unnecessary manual reviews and resource waste. According to Elliptic, high false positive rates in crypto are not due to inherent suspiciousness of cryptoassets but rather structural differences between traditional financial systems and cryptoasset markets.

The characteristics of blockchain transactions amplify false positives due to pseudonymous transactions, high transaction volumes and speed, cross-chain complexity, indirect exposure to higher-risk services, and immature rule calibration. To reduce AML false positives, Elliptic recommends adopting a risk-based approach (RBA) to alerting, improving data quality and coverage, enabling cross-chain and cross-asset tracing, configuring and calibrating risk rules, and using behavioral and contextual signals.

Elliptic's solution, Elliptic Lens, provides over 10 million configurability permutations across risk thresholds, entity categories, and exposure parameters. This level of control filters out low-value alerts and delivers significantly greater alert precision, allowing compliance teams to investigate what matters.