BIS Proposes Behavior-Based AML Scoring for Crypto Assets

Published: 2025-09-16 05:06:59 |

Bank for International Settlements (BIS) publishes a new AML compliance approach in Bulletin No.111, shifting focus from identity verification (KYC) to on-chain funds traceability. The proposal introduces an AML Compliance Score (0–100) based on the provenance of funds, categorizing addresses into allow-lists and deny-lists, with dynamic risk assessments for stablecoins (account model) and Bitcoin (UTXO model). BIS outlines three implementation modes—strict allow-list, multi-criteria, and lenient deny-list—and establishes a layered responsibility model: centralized hubs (exchanges, stablecoin issuers) bear strict AML duties, while DeFi protocols rely on on-chain monitoring. The report also highlights shortcomings of FATF’s Travel Rule implementation—only one jurisdiction fully compliant—and criminals’ shift to stablecoins and smurfing tactics. BIS’s framework acknowledges the irreversible nature of decentralization and offers a cooperative regulatory template to balance innovation and risk mitigation.

Bullish

We assign a bullish impact because BIS’s behavior-based AML framework reduces regulatory uncertainty and clarifies compliance obligations, which can encourage institutional participation and adoption of on-chain activities. Past regulatory clarifications, such as updated FATF guidance on crypto VASPs, have often led to increased market confidence and inflows. In the short term, traders may see limited immediate effect, but long-term, clearer regulation frameworks typically support market stability and growth.