Elliptic Employs AI to Detect Money Laundering Through Bitcoin, Enhances Identification Tools

In an effort to combat money laundering through cryptocurrencies, Elliptic, an analytical firm, has successfully deployed artificial intelligence (AI) technologies to enhance its transaction monitoring tools. The company announced significant progress in utilizing AI to detect illicit financial activities specifically related to Bitcoin.

The newly released report, co-authored by specialists from the MIT-IBM Watson AI Lab, outlines the methodologies applied in this research. According to the firm, AI advancements have revolutionized their capability to identify suspicious transactions in ways previously not possible. Elliptic has tested these new methods on a dataset containing data from over 200 million transactions, demonstrating the effectiveness of their enhanced tools.

The company's approach involves the use of deep learning algorithms to detect criminal proceeds deposited at cryptocurrency exchanges, new money laundering transaction patterns, and previously unknown illegal wallets. "Instead of just identifying illegal transactions by individuals, our AI model is trained to detect 'subgraphs'—chains of operations that represent Bitcoin laundering," stated a spokesperson from Elliptic.

This strategy allows the company to focus on the multi-step process of laundering money rather than the illegal activities of specific network entities. Elliptic believes that blockchains, in contrast to the typically fragmented traditional financial transactions, provide an ideal environment for machine learning applications because of the availability of comprehensive transaction data and the nature of the entities involved.

"Blockchains offer fertile ground for machine learning methods due to the availability of transaction data and the types of entities that perform them. This is in contrast to traditional financial operations, where information is usually scattered, making it difficult to apply these methods," the report explains.

In a related study conducted in October 2023, Elliptic investigated how the terrorist organization Hamas received millions of dollars in crypto donations. This research highlights the urgency and relevance of developing sophisticated tools like those Elliptic has introduced to trace and intercept illegal financial flows effectively.