Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What is one advantage of machine learning compared to rule-based systems in cryptocurrency AML transaction monitoring?

1. Fewer false-positive results and a higher detection rate

2. Combined APIs allowing automatic blockchain analytics

3. Meeting FATF recommendations on machine learning

4. Ability to detect money laundering without labeling

The correct answer is: Fewer false-positive results and a higher detection rate

One significant advantage of machine learning in cryptocurrency Anti-Money Laundering (AML) transaction monitoring is that it tends to produce fewer false-positive results while achieving a higher detection rate. Machine learning algorithms can analyze vast datasets and identify complex patterns that might indicate suspicious activity, which rule-based systems may not detect due to their reliance on predefined rules. Rule-based systems operate on a fixed set of criteria that are created based on historical data and expert knowledge. While these systems can catch obvious cases of money laundering, they often generate a high number of false positives because they might flag transactions that do not correspond to illicit activity but fit within the parameters set by the rules. This can lead to inefficiencies and wasted resources as compliance teams must sift through numerous alerts that do not warrant further investigation. In contrast, machine learning models evolve over time by learning from new data. They improve their accuracy and adaptability, thereby reducing the number of false positives as they fine-tune their ability to recognize genuine cases of suspicious behavior. This capability is particularly valuable in the dynamic and rapidly changing landscape of cryptocurrency, where new laundering techniques emerge regularly. Therefore, leveraging machine learning allows organizations to enhance their AML efforts by focusing on real threats more effectively and efficiently, ultimately leading to a more streamlined and