Crypto AML glossary

The terms you meet in AML reports, exchange emails and regulations, in one or two sentences each.

AML Anti-money laundering: Laws, rules and controls meant to stop criminal money from being moved and disguised through financial services, including crypto services.
AML check Wallet screening: A lookup that estimates how much of an address’s funds link to risky sources such as scams, sanctions or mixers. See checker rankings.
Attribution: Linking blockchain addresses to real-world entities (an exchange, a scam, a mixer). An AML score is only as good as the attribution data behind it.
Bech32 / Bech32m: Address formats used by native SegWit (bc1q…) and Taproot (bc1p…) Bitcoin addresses and by Litecoin ltc1… addresses. They have a built-in checksum and must not mix upper and lower case.
Blacklist (token freeze): A list kept in a stablecoin’s smart contract of addresses the issuer has frozen. A blacklisted address cannot send the token. See USDT TRC-20.
CDD Customer due diligence: Checks a regulated business runs on its customers: identity, purpose of the relationship and ongoing monitoring. KYC is part of CDD.
CASP Crypto-asset service provider: The EU term (from MiCA) for businesses such as exchanges and custodians that provide crypto services. Elsewhere often called a VASP.
DEX Decentralised exchange: A smart contract where users swap tokens without a central operator holding their funds.
Exposure (direct / indirect): How an address is linked to a risky source. Direct exposure means it transacted with that source; indirect means the link runs through other addresses (“hops”).
FATF Financial Action Task Force: The inter-governmental body that sets global anti-money-laundering standards, including those for virtual assets and the Travel Rule.
Hop: One step between addresses in a chain of transactions. Risk one hop away is more direct than risk five hops away.
KYC Know your customer: Identity verification a service runs on its users: documents, selfie, address. See AML vs KYT vs KYC.
KYT Know your transaction: Screening and monitoring of individual transactions — where the money came from and where it goes. Businesses use KYT tools; individuals use AML checkers.
MiCA Markets in Crypto-Assets Regulation: The EU regulation for crypto-asset issuers and service providers. Its service-provider rules apply from 30 December 2024.
Mixer Tumbler: A service that pools and reshuffles coins to break the trail between sender and receiver. See Mixer.
MWEB MimbleWimble Extension Blocks: An opt-in privacy feature on Litecoin that hides amounts inside an extension block. See Litecoin.
OFAC Office of Foreign Assets Control: The US Treasury office that administers US sanctions and publishes the SDN list, which can include crypto addresses.
Risk score: A number, often 0–100, summarising how risky an address’s funds look. Scales differ between services. See what a risk score means.
SDN list Specially Designated Nationals list: OFAC’s list of sanctioned people and entities. Entries can include digital currency addresses.
Seed phrase Recovery phrase, mnemonic: 12–24 words that control a wallet. Anyone who has it can take your funds. No AML check ever needs it.
Self-hosted wallet Unhosted wallet: A wallet where you hold the keys yourself, as opposed to an account at an exchange.
Source of funds: Evidence of where specific money came from — a salary, a trade, an exchange withdrawal. Exchanges may ask for it when a deposit is under review.
Taint: An informal term for the share of an address’s funds that can be traced to a risky source.
Travel Rule: The requirement that service providers send sender and recipient information along with transfers. See the Travel Rule explained.
TXID / transaction hash: The unique identifier of a blockchain transaction. Some checkers can screen a TXID to show where the coins in that transfer came from.
VASP Virtual asset service provider: The FATF term for businesses that exchange, transfer or hold virtual assets for others.