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

What is the primary goal of address clustering?

1. Grouping addresses with small unspent amounts

2. Detecting commonly used addresses for AML risk scoring

3. Aggregating addresses connected to one entity

4. Analyzing purchases from the same IP address

The correct answer is: Aggregating addresses connected to one entity

The primary goal of address clustering is to aggregate addresses connected to one entity. This technique is essential in the analysis of blockchain transactions, as it helps in understanding the relationships between various addresses and identifying which addresses may belong to the same user or organization. By clustering addresses, analysts can track the flow of funds, assess the behavior of specific entities, and detect illicit activities that may otherwise go unnoticed. Address clustering proves particularly useful in anti-financial crime efforts, including money laundering prevention and fraud detection, as it allows for a more comprehensive examination of transaction patterns. Understanding these connections can lead to better compliance with regulations and enhanced risk assessments for financial institutions. While other options relate to different aspects of transaction analysis, they do not specifically capture the overarching aim of identifying connections among addresses as effectively as address clustering does. Grouping unspent transaction outputs or analyzing purchases based solely on IP addresses lacks the specificity and depth that clustering addresses accomplishes regarding entity identification. Similarly, while detecting commonly used addresses can provide useful insights for anti-money laundering measures, it does not inherently contribute to the identification and aggregation of all addresses linked to a single user or entity.