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AI in Cryptocurrency Investigations and Compliance

AI in Cryptocurrency Investigations and Compliance

The AI in Cryptocurrency Investigations and Compliance webinar held on Thursday August 10, 2023 by A&D Forensics was expertly covered by our Guest speaker, William Callahan from Blockchain Intelligence Group. This session was attended by Law Enforcement Officers, Compliance Officers, intending Crypto Compliance Officers. In this blog post, we’ll recap the key takeaways from the webinar with emphasis on how Artificial Intelligence, AI has transformed financial investigations and  can be used in Cryptocurrency Investigations and Compliance

What is Artificial Intelligence (AI)?

Artificial intelligence(AI) refers to the simulation of human intelligence in machines that are  capable of performing tasks that require human intelligence. Artificial intelligence (AI) tries to imitate cognitive processes like learning, problem-solving, reasoning, and decision-making.

Techniques and Technologies of AI

The Techniques and Technologies of AI include:

  • Machine Learning: AI recognizes patterns in data and makes predictions or decisions based on that learning. AI can easily make decisions for data based on the learning given.
  • Neural Networks: AI is inspired by the structure of the human brain,it processes information enabling tasks like image and speech recognition.
  • Natural Language processing: This technology in AI helps to interpret and generate human language. It powers chatbots, language translation and sentiment analysis, mostly found in customer care sections of modern applications.

AI in Blockchain and Crypto Investigations 

Blockchain and Artificial Intelligence collaborate harmoniously. While Blockchain excels at securely storing and verifying various types of records, Artificial Intelligence, AI  demonstrates its brilliance by analyzing substantial volumes of data, identifying patterns, and streamlining the decision-making process.

AI in Crypto Investigation involves leveraging advanced technologies to analyze complex transactions on blockchain networks,revealing hidden patterns and trends. This analytical approach allows individuals to uncover insights patterns,trends and connections that may have happened in the digital world.

Benefits of AI in Cryptocurrency Investigations and Compliance

  1.  Introduction of automation and advanced analysis 

AI rapidly processes large financial datasets, completing tasks that would take a week in a fraction of the time, while also detecting intricate patterns, anomalies, and concealed relationships. In mere hours or even minutes, machine learning systems can handle vast volumes of data, alleviating the workload that would otherwise require extensive teams of trained researchers several months to tackle. 

Cryptocurrency Investigators, Crypto Compliance Officers and Blockchain analysts are effectively utilizing AI to implement techniques like “clustering” and “peeling.” These approaches help identify patterns and extract insights to pinpoint cryptocurrency users potentially engaged in unlawful actions.

  1. Improved efficiency and accuracy 

AI speeds up and streamlines procedures, reducing human error and effort while increasing the accuracy of spotting suspicious activity. Crypto investigators can also quickly evaluate huge and complex information.

  1.  Predictive Analysis 

 Artificial intelligence can predict potential financial crimes based on historical data.This approach helps crypto investigators and crypto compliance officers prevent fraudulent activities 

  1. CrossChain Analysis 

 AI enhances cryptocurrency investigation processes involving fraudulent activities from multiple chains. i.e transfers made between multiple blockchain networks.

  1.  Enhanced Data Analysis 

Artificial Intelligence in crypto investigations helps in breaking down multiple databases to make research easier for the investigators.

  1.  Clustering and Link Analysis 

  AI facilitates the grouping of related addresses through a process called clustering. Clustering involves knowing addresses that are controlled by the same entity or are part of the same networks. Programmed algorithms with a focus on “clustering” identify and classify actions in order to link them to certain entities.

  1. AI aids Crypto Investigators in detecting “Peeling”

AI aids investigators in detecting “peeling,” a method that entails recognizing transactions where fractional portions of a cryptocurrency unit are separated and the remaining amount is sent back to a unique change address. The data extracted from these partially peeled and returned currency units can offer crypto invetigators significant leads and valuable insights. Artificial Intelligence empowers investigators and financial crime analysts with various analytical techniques, such as examining patterns in input addresses and one-off change addresses, as well as observing trends in timing, frequency, and transaction sizes. These methods assist in unveiling concealed layers and exposing the individuals responsible for illicit activities within the code.

AI and Money Laundering Detection

AI can help the Crypto Compliance Officers and Money Laundering Reporting Officers in various ways such as:

  1. Detecting Suspicious Transactions:  The role of AI in detecting potential money laundering in cryptocurrency transactions is pivotal. Through the analysis of transaction data, AI can identify transactions showing traits frequently linked with money laundering and raise red flags accordingly.
  2. Identifying Unusual Patterns and Anomalies: Utilizing AI-driven algorithms, the system excels in spotting atypical transaction patterns that may suggest efforts to conceal or launder funds, encompassing rapid high-volume transactions, abrupt substantial transfers, or recurrent minor amounts. Additionally, AI identifies anomalies by contrasting transaction behaviors with established benchmarks.
  3. Uncovering Complex Money Laundering Schemes: AI algorithms are good at finding weird money movements that could mean someone is trying to hide or clean money. This  could include a high volume of rapid transactions, sudden large transfers, or repetitive small amounts.
  4. Behavioural Analysis: AI also identifies anomalies by comparing transaction behaviors against established norms.

Challenges and Limitations of AI in Cryptocurrency Investigations and Compliance

  1.  Artificial intelligence algorithms rely on historical data: AI algorithms use old data and might not catch new tricks used in crypto crimes. Crypto is changing quickly, and AI can’t always keep up, which makes it hard for AI to find crimes accurately.
  2. Concerns about Data Privacy: AI needs transaction info to study, but this can get people worried  about their privacy. It’s tricky to balance investigating and protecting data rights. Keeping sensitive info safe is important for people to trust the system.
  3. False Positives: AI can sometimes generate false positives, which means it might flag things as suspicious even if they’re legitimate. On the other hand, false negatives can happen when AI doesn’t catch subtle but important signs of illicit behavior.

Striking The Right Balance Between AI Automation and Human Insight

Although crypto investigation and compliance is being transformed by artificial intelligence, it is still important to understand that this technology cannot completely replace human intuition and knowledge of complex financial situations. To efficiently undertake extensive investigations in some complex financial situations, human knowledge is required.

Without  doubt, the use of AI will continue to influence how cryptocurrency investigations are conducted. This will include developments like AI-driven predictive analysis, enhanced DEFI tracking, and sophisticated risk evaluations. As AI develops its ability to predict future financial crimes, its proactive nature gives investigators the ability to step in before illegal acts take place. This joint effort of AI and human monitoring has the potential to produce an investigative process that is more efficient and informative.


In Conclusion, AI helps to speed up investigations, increase precision, and reveal insights that were previously hidden within digital networks. While AI definitely possesses significant capability, its full potential can only be realized when it works in collaboration with skilled investigators. Human intervention is still required to make complex decisions, handle ethical issues, and provide context. Artificial intelligence also protects against human errors during the investigation process, reducing the need for time-consuming tasks.

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Chioma Onyekelu is a highly skilled and accomplished professional in the field of cryptocurrency and blockchain technology. She is a Certified Cryptocurrency Investigator and Crypto Compliance Specialist, as well as a Blockchain Forensic Specialist and a teacher. She is also a public speaker and her teachings include consultations and practical solutions for African Start-ups on the best and most cost-effective way to build with compliance in mind. With a wealth of knowledge and experience in these cutting-edge technologies, she is well-equipped to navigate the complex landscape of cryptocurrency-related crimes.

In her current role as a Blockchain Forensic Specialist at A&D Forensics, Chioma is responsible for tracing and investigating cryptocurrency-related crimes, as well as training law enforcement agents and compliance officers on the latest developments and best practices in the field. In addition, she is currently pursuing a Master's degree in Blockchain and Digital Currencies at the University of Nicosia in Cyprus, further solidifying her expertise and understanding of the technology.

Chioma's dedication and passion for the field is evident in her work, and she is committed to staying at the forefront of developments in cryptocurrency and blockchain technology to provide the best possible service to her clients. Her exceptional skills in educating and consulting make her a valuable asset to the industry and an authority in the field of Blockchain and Crypto Compliance.


Adedeji is a Forensic Investigation Practitioner and CertifiedBlockchain/Cryptocurrency Forensic
Investigator (CFE, CCI, CCFI & Reactor Certified) with more than Fifteen years of experience across few banks within the Nigeria Financial Sector and educator in Corporate workplace settings, Deji is uniquely qualified and involved in forensics analysis of Financial Infractions, Cryptocurrency crimes and designing plans that works for Government, Regulators, Law enforcement.

He was appointed by SEC Nigeria as Member Virtual Asset and Fintech Regulatory framework drafting Committee, He is a member of Global Digital Finance’s KYC/AML working group in France and a member of the Industry led Thinktank that worked on and came out with FATF cryptocurrency Travel rule InterMessaging Standard for Virtual Assets (IVMS101) to help combat money laundering and terrorism financing using cryptocurrencies around the globe.

His law enforcement training efforts on new money and cybercrime have seen him train many law enforcement agents in various countries i.e Nigeria Police, Nigeria Army CyberWarfare command, Zambia Financial Intelligence Unit, Zambia Central Bank and more.
He is Chainalysis Sole Africa Investigative Partner helping law enforcement investigate criminal organizations using cryptocurrency to conceal illiccit activities across Africa, he is also a training Partner for Blockchain Intelligence Group based out of Canada.

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