Fraud Prevention, KYC and AML Compliance for P2P and Cryptoasset Exchange Operations Training Course

P2P Exchange Operations and the Fraud Risk Landscape

• Escrow-based order lifecycle and asset release mechanisms.
• Risk exposure points: off-platform fiat settlements vs. on-platform crypto.
• Consequences of fraud, including chargebacks and bank claims.

Exercise 1: Mapping Exposure — Teams trace the journey of a buy and sell order from initiation to release, identifying all points where off-platform payments break the link between identity and funds.

Regulatory Framework and Supervisory Expectations

• FATF Recommendations, VASP obligations, and the travel rule.
• Roles of crypto supervisory authorities and exchange licensing.
• Jurisdictional risks, grey-list monitoring, and sanctions exposure.

Fraud Typologies in P2P Trading

• Payment channel deviations and mismatches in payer accounts.
• Triangulation, third-party payers, and the reuse of payment proof.
• Partial payments, altered figures, and visually similar amounts.

Case Study: Five Recurring Patterns — Participants analyze anonymized real-world dispute records, classifying them against five key typologies and identifying the specific control failure in each instance.

False Confirmations, Forged Receipts, and Account Takeovers

• Orders incorrectly marked as paid despite no actual transfer.
• Edited screenshots and falsified bank receipts.
• Cross-phishing in order chats and credential theft.
• Compromised accounts used to defraud other users.

Workshop: Phishing in Order Chats — Teams distinguish between genuine support messages and fraudulent ones, then draft the takedown and revalidation procedure for the affected account.

KYC for Individuals: Levels 1 and 2

• Level 1 data collection and identity document verification.
• Level 2 revalidation, including video selfie liveness checks and list screening.
• Ensuring verified identity matches the payment instrument.

Lab: Onboarding Under Pressure — Participants conduct Level 1 and Level 2 reviews on sample files, documenting discrepancies that necessitate revalidation.

KYC for Legal Entities and Beneficial Ownership

• Review of corporate documents, representation powers, and signatories.
• Mapping beneficial ownership chains and identifying control indicators.
• Assessing legal person risk factors and conducting periodic reviews.

Identity Fraud and Document Forensics

• Detection of forged, borrowed, and synthetic identities.
• Countering liveness bypass, deepfake attempts, and injection attacks.
• Triggers for revalidation following disputes or compromise claims.

Lab: Document Forensics — Participants examine tampered documents and screenshots for inconsistencies in font, layout, metadata, and account numbers.

AML Screening, Sanctions, and PEPs

• List matching, setting tolerance levels, and managing false positives.
• Identifying PEPs, adverse media analysis, and verifying source of wealth.
• Enhanced due diligence and defining escalation thresholds.

Customer Risk Assessment and the Risk-Based Approach

• Evaluating customer, product, channel, geographic, and behavioral risk factors.
• Assigning risk ratings, setting review triggers, and making treatment decisions.
• Scaling due diligence efforts to match actual risk levels.

Transaction Monitoring and Blockchain Analytics

• Withdrawal approval criteria: account age, KYC status, and transaction history.
• Wallet attribution, identifying high-risk counterparties, and fund tracing.
• Risk assessment of chargeback-prone gateways and payment methods.

Case Study: The Large Withdrawal — Participants review a withdrawal request with a complex funding history, decide whether to approve or escalate, and justify their decision based on monitoring criteria.

Evidence Standards for Payment Proof

• Defining acceptable evidence: bank statements and uninterrupted recordings.
• Performing authenticity checks on documents, captures, and metadata.
• Documenting exactly what was verified and what was not.

Lab: Evidence or Artifact? — Teams categorize a set of submissions into acceptable evidence, insufficient evidence, and probable fabrication, specifying alternative requirements for the latter.

Disputed Evidence and Interbank Delays

• Resolving cases where both parties provide seemingly valid evidence.
• Managing interbank processing delays and implementing preventive holds.
• Applying documented decision criteria for time-expired orders.

Workshop: Both Sides Are Right — Teams resolve a dispute where buyer and seller both hold apparent proof, defending their final outcome.

Action and Sanctions Playbook

• Freezing collateral, restricting accounts, and implementing suspensions.
• Enforcing partial payment deadlines and returning funds to originating accounts.
• Handling refunds to incorrect banks, including fees and resolution timelines.
• Managing restricted balances and retaining new deposits.

Exercise: Drafting the Sanction — Participants compose the action, notice, and timeframe for three escalating cases, testing their drafts against playbook criteria.

Case Management, Documentation, and Escalation

• Maintaining case files, internal notes, and evidence retention records.
• Utilizing the escalation matrix and department head reviews.
• Reporting suspicious activities and maintaining accurate records.

Capstone: End-to-End Fraud Case

• Comprehensive review of orders, evidence assessment, and identity revalidation.
• Executing escalations, deciding on sanctions, and resolving counterparty issues.
• Drafting justification memos and conducting peer reviews.

Capstone: Full Case Run — Each team manages a complete simulated case from the initial suspicious message to the final decision, presenting a written justification for peer review.

Diagnostic and Advisory Session (Additional Component)

• Review of current practices and identification of protocol gaps.
• Guidance on evidence standards and handling disputed cases.
• Guidance on defining actions and sanctions criteria.