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Crypto Transactions Monitoring

Regulations mandate all Virtual Asset Service Providers to have transactions monitoring in place. SmartCredit.io implements AI-based crypto fraud scoring on every connected wallet.

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Transactions monitoring is a standard requirement in traditional finance. All incoming and outgoing transactions pass through monitoring systems — typically AI-based — that flag suspicious activity, screen for sanctions exposure, and detect patterns associated with money laundering or fraud.

Regulatory mandate

Transactions monitoring is required for CeFi (Centralized Finance) companies under AML/CFT regulations. Historically, many CeFi companies have implemented only KYC and AML screening and argued that real-time transaction monitoring was impractical at scale.

DeFi companies are increasingly being classified as Virtual Asset Service Providers (VASPs) under FATF guidance and regional frameworks such as MiCA. As VASPs, they are subject to the same transaction monitoring obligations as CeFi. This is no longer a future scenario — VASP classification for DeFi platforms is active regulatory policy in multiple jurisdictions.

What transactions monitoring checks

A transactions monitoring system analyzes wallet behavior and transaction patterns to assess risk. Key signals include:

  • Fraud probability — likelihood that a wallet has been involved in scams, rug pulls, or theft
  • Sanctions screening — whether a wallet address appears on OFAC or other sanctions lists
  • Source of funds — whether incoming funds can be traced to known illicit sources (mixers, darknet markets, hacks)
  • Behavioral patterns — transaction velocity, counterparty concentration, and other on-chain signals that indicate elevated risk

SmartCredit.io implementation

SmartCredit.io has integrated AI-based transactions monitoring via the ChainAware Fraud Score API. Every wallet that connects to the application is automatically analyzed in real time. If the fraud probability exceeds the threshold, transactions are blocked — the user cannot proceed.

This approach provides compliance coverage without requiring manual review: the risk assessment happens at connection time, before any transaction is initiated.

The ChainAware API is available to other platforms seeking to implement the same standard. Full API documentation is at swagger.chainaware.ai.

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