What is money laundering and how CoinsPaid prevents it
Table of contents:
What is money laundering
Money laundering is the process of taking money from crime and making it look like it came from a legal source.
International bodies such as the UN and the Financial Action Task Force (FATF) describe money laundering as turning the proceeds of crime into “legitimate” assets that can safely re-enter the financial system.
Traditionally, three stages are involved:
- Placement – getting illicit funds into the financial system (cash deposits, crypto purchases, shell companies).
- Layering – moving funds through complex transactions, accounts, exchanges or jurisdictions to obscure their origin.
- Integration – bringing “cleaned” money back as apparently lawful income, investments, property or business revenue.
Crypto can appear attractive to criminals at the layering stage because of its speed, global reach and pseudonymous addresses. That is exactly why strong anti-money laundering (AML) controls are unavoidable for any serious crypto business.
Why AML matters in crypto
AML rules are now built into the way regulated crypto markets operate.
Global AML standards from FATF explicitly cover “virtual asset service providers” (VASPs) and expect them to identify their customers, monitor activity and report suspicious behaviour, just like banks.
In practice, this means:
- Exchanges, wallets, payment processors and other crypto-asset service providers must have risk-based AML/CTF programs and internal controls.
- The so-called Travel Rule now applies to crypto in the EU and many other regions: originator and beneficiary information must accompany transfers between regulated providers, with no minimum threshold in the EU.
If your crypto payment partner takes AML seriously, you are far less likely to face frozen funds, rejected bank relationships or reputational damage because suspicious activity flowed through your payment channels.
Global AML regulations
AML is built on a layered framework:
- Global standards: FATF Recommendations are recognised as the benchmark for AML/CTF. Countries are evaluated against these standards and can be placed on “grey” or “black” lists if they fall short.
- Regional rules: In the EU, AML directives (such as AMLD5) and the new AML Regulation, combined with MiCA, define how crypto-asset service providers must be licensed, supervised and subject to the Travel Rule.
- National regimes: Each country implements licensing and supervision. Estonia is one of the most advanced jurisdictions for crypto, with a full licensing regime for crypto-asset service providers overseen by the Estonian Financial Supervision Authority.
Countries that fail to enforce AML standards can be grey-listed by FATF, making it harder and more expensive for their businesses to access global finance – and rewarding jurisdictions that maintain strong AML supervision.
If you are planning to accept crypto or expand international payouts, our team can walk you through how CoinsPaid’s licensed infrastructure and AML controls fit into your compliance framework and banking relationships.
Talk to our experts
If you are planning to accept crypto or expand international payouts, our team can walk you through how CoinsPaid’s licensed infrastructure and AML controls fit into your compliance framework and banking relationships.
How CoinsPaid prevents money laundering
CoinsPaid operates under a strict AML/CTF framework grounded in Estonian and EU law and aligned with global standards – with a clear, zero-tolerance stance toward financial crime. This section summarises how that looks in practice.
1. Licensed in Estonia
CoinsPaid’s services are operated by Dream Finance OÜ, a company authorised in Estonia to provide virtual currency services, including exchange and wallet services, under license No. FVT000166. These licenses can be validated on the official register of the Estonian authorities.
Being licensed in Estonia means:
- CoinsPaid is subject to EU AML rules, Estonia’s national AML legislation and financial supervision requirements.
- The company must maintain robust governance, fit-and-proper management, internal controls and capital requirements as defined by Estonian law.
- Its AML Policy forms an integral part of the Terms of Use and is legally binding in relation to the provision of services.
2. Risk-based AML framework
CoinsPaid’s AML Policy is designed around a risk-based approach. Instead of treating every customer or transaction the same, the company assesses and manages risks according to their nature, size, geography and behaviour.
In practice, this includes:
- Assigning clear responsibilities to AML officers and a Money Laundering Reporting Officer (MLRO).
- Documented internal procedures for customer due diligence (CDD), ongoing monitoring, sanctions screening, escalation and reporting.
- Regular reviews and updates of AML procedures in light of new regulation, typologies and supervisory expectations.
The goal is to ensure that controls are proportionate to the risks while still supporting efficient payment flows for legitimate business.
3. KYC and KYB checks
CoinsPaid applies Know Your Customer (KYC) and Know Your Business (KYB) processes to verify who it is dealing with and whether they are legally allowed to use crypto payment services.
For individual clients, this typically means validating identity documents and, where necessary, proof of address and source of funds.
For corporate clients, CoinsPaid performs KYB checks, which may include:
- Verifying company registration details, beneficial ownership and control structure.
- Assessing business activities, expected transaction volume and countries of operation.
- Screening for politically exposed persons (PEPs), sanctions and adverse media.
In some cases, additional data and documents are required to satisfy KYC and AML obligations; if clients refuse, CoinsPaid simply cannot provide services.
4. Transaction monitoring tools
Strong onboarding is only one layer. CoinsPaid also runs ongoing transaction monitoring to detect unusual or high-risk patterns.
According to CoinsPaid’s product documentation, every payment is subject to risk scoring and KYT (Know Your Transaction) checks, with suspicious transactions flagged for review.
Monitoring covers, among other things:
- Unusual transaction sizes or sudden spikes in volume.
- Patterns suggestive of structuring, mixing or layering.
- Connections to high-risk jurisdictions, services or addresses.
- Behaviour inconsistent with a client’s known business profile.
These tools allow CoinsPaid to act quickly – whether that means asking questions, restricting activity or filing a suspicious activity report with the authorities.
5. Managing high-risk activity
Where heightened risk is identified, CoinsPaid applies enhanced due diligence (EDD) measures in line with its AML Policy and Estonian law.
This may include:
- Deeper verification of source of funds or wealth.
- More detailed documentation of business operations or counterparties.
- Stricter limits or additional approvals for certain transaction types.
- Refusing or terminating the relationship if the risk cannot be mitigated.
When CoinsPaid has reasonable grounds to suspect money laundering, terrorist financing or other financial crime, it is required to report this to the competent Estonian authority and to cooperate with any subsequent investigation, subject to applicable law.
6. Recordkeeping and audits
AML work depends on clear audit trails. CoinsPaid keeps records of customer identification data, transaction history, risk assessments and reports for the periods required under Estonian and EU law.
On the operational side:
- CoinsPaid has passed multiple independent cybersecurity audits and holds ISO/IEC 27001 certification for its information security management systems.
- Internal documentation such as the AML/CFT Policy, KYC Policy and Code of Conduct is part of a broader ESG and governance framework overseen by management.
This combination of regulatory recordkeeping and external audits helps ensure that the AML program is not only well-designed on paper but also operating effectively in practice.
7. Zero-tolerance culture
Technology and procedures only work if people use them. CoinsPaid’s governance policies highlight the role of management, AML officers and all employees in preventing financial crime, including training and clear expectations around ethical behaviour.
CoinsPaid’s stance is simple:
- The platform is not a place to hide illicit funds.
- Employees are expected to escalate concerns, not ignore them.
- Clients engaging in abusive or illegal activity face restrictions, termination and, where required by law, reporting.
For legitimate businesses, this zero-tolerance approach protects reputation and keeps payment flows within the boundaries banks and regulators expect.
Benefits for business clients
Working with a regulated provider that takes AML seriously brings tangible advantages for merchants and enterprises:
- Regulatory confidence: An Estonia-licensed provider operating under EU AML rules makes it easier to align crypto payments with your own compliance program and auditor expectations.
- Banking relationships: Strong AML controls on the crypto side make it easier to explain your flows to banking partners and reduce the risk of account closures or unexplained delays.
- Lower operational risk: Ongoing monitoring, sanctions screening and KYT reduce your exposure to fraud and abuse passing through your merchant channels.
- Audit-ready documentation: Clear records and documentation from CoinsPaid support internal and external audits and simplify reporting.
In other words, robust AML controls are part of the service package, embedded in how CoinsPaid processes payments for clients.
Start with CoinsPaid
If you want to accept crypto while staying aligned with AML expectations, talk to CoinsPaid’s team about onboarding, required documentation and how our risk-based controls can support your specific business model.
Compliance as advantage
AML compliance is often viewed as a cost. In reality, in crypto it is one of the clearest competitive advantages.
FATF grey-lists and enforcement actions show that jurisdictions and firms with weak AML enforcement pay a price in higher funding costs, restricted access to markets and reputational damage.
On the flip side:
- Regulated, audit-ready infrastructure makes it easier for enterprises and payment partners to work with you.
- Strong AML controls support long-term growth rather than short-term volume from dubious sources.
- A clear “zero-tolerance” stance sends a signal to regulators, banks and clients that your business is built for the regulated future of crypto.
CoinsPaid’s Estonia licence, ISO-certified infrastructure and documented AML/CTF framework position it in this second category – as a partner for businesses that want crypto payments without compromising their compliance standards.
Speak with CoinsPaid
If you need a deeper dive into how our AML processes map to your own policies, or how to integrate CoinsPaid into your compliance workflows, reach out to our team – we are ready to discuss the details with your compliance and legal stakeholders.
