New York State Ramps up Blockchain Monitoring to Enforce Sanctions
Blockchain Monitoring
Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
Comprehensive monitoring services enable you to manage both public and private blockchains. The application leverages machine learning to identify suspicious activity, monitor transactions, and track smart contract performance across both cloud and on-premise environments.
Monitoring Sanctions Technology
Sanctions, whether targeted or comprehensive, are designed to restrict and influence governments from supporting bad actors. Yet with every expansion of these programs, sanctioned entities appear bolder in their efforts and creativity to evade.
As a young financial instrument, cryptocurrency holds great appeal to sanctioned entities. However, participation in the cryptocurrency system by sanctioned persons may significantly impact its sustainability and legitimacy because the presence of bad actors could taint the system, and thwart the potential benefits cryptocurrencies pose for speed and costs of transactions.
NEWS
New York state’s efforts to enforce sanctions against Russia have ramped up a gear with the Department of Financial Services, or DFS, expediting the procurement of additional blockchain analytics technology. Blockchain analytics will help ensure that NY-licensed companies don’t send money to sanctioned Russians. According to a statement released Wednesday, the department will use the technology to help detect exposure to Russian individuals and entities subject to federal sanctions, by the virtual currency businesses licensed by the department.
New York use Technological Assets to Maintain The Protection
NY Gov. Kathy Hochul issued an executive order on Feb. 27 directing state agencies to divest from Russian institutions and companies, as well as entities that support them. She said: “New York is proudly home to the nation’s largest Ukrainian population and we will use our technology assets to protect our people and show Russia that we will hold them accountable.”
BitLicense
A BitLicense is a common term used for a business license for virtual currency activities, issued by the New York State Department of Financial Services (NYSDFS) under regulations designed for companies. The regulations are limited to activities involving the state of New York or a New York resident.
New York requires individuals and companies engaged in several activities with virtual currency to apply for a BitLicense. The DFS is now “assessing several technology tools and service providers to augment current supervisory capabilities.” No other details were given about the analytics technology the state is looking for.
Digital Regulatory Reporting Mechanism of New York
The DFS held a tech sprint an “intense problem-solving session meant to facilitate innovation, collaboration and creative solutions to difficult problems” to design a digital regulatory reporting mechanism for virtual currency companies in March 2021. It was noted at the time that event organizers were working with some of the participants to advance the development of their solutions.
Blockchain analysis is typically used to assure anti-money laundering compliance and customer protection. The process often combines the tracing of transfers on the blockchain with information obtained off-chain to understand transactions.
