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

P2P Exchange Operations and the Fraud Risk Environment

• The escrow-based order lifecycle and the release of assets.
• Risk exposure: off-platform fiat vs. on-platform crypto.
• Consequences of fraud loss, chargebacks, and bank claims.

Exercise 1, Mapping the Exposure: In teams, participants track a buy order and a sell order from initiation to release, identifying every point where off-platform payments break the link between identity and funds.

Regulatory Frameworks and Supervisory Expectations

• FATF Recommendations, VASP obligations, and the travel rule.
• Cryptoasset 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 schemes, third-party payers, and reused payment proofs.
• Partial payments, altered amounts, and visually similar figures.

Case Study, Five Recurring Patterns: Participants classify real, anonymized dispute records according to five typologies and identify which control failed in each instance.

False Confirmations, Forged Receipts, and Account Takeovers

• Orders marked as paid despite the absence of an actual transfer.
• Edited screenshots and falsified bank receipts.
• Cross-phishing in order chats and credential theft.
• Hijacked accounts used to defraud other users.

Workshop, Phishing in Order Chats: Teams compare genuine support messages with fraudulent ones, then draft the process for takedown and account revalidation.

KYC for Individuals: Levels 1 and 2

• Level 1 data collection and identity document review.
• Level 2 revalidation, video-selfie liveness checks, and list screening.
• Aligning verified identity with 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

• Corporate documentation, representation powers, and signatories.
• Beneficial ownership chains and control indicators.
• Risk factors for legal entities and periodic reviews.

Identity Fraud and Document Forensics

• Forged, borrowed, and synthetic identities.
• Liveness bypass techniques, deepfake attempts, and injection attacks.
• Triggers for revalidation following disputes or compromise claims.

Lab, Document Forensics: Participants examine tampered documents and screen captures, looking for inconsistencies in font, layout, metadata, and account numbers.

AML Screening, Sanctions, and PEP

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

Customer Risk Assessment and the Risk-Based Approach

• Factors including customer profile, product, channel, geography, and behavior.
• Risk rating, review triggers, and decision-making on treatment.
• Tailoring due diligence efforts to the actual level of risk.

Transaction Monitoring and Blockchain Analytics

• Withdrawal approvals considering account age, KYC status, and history.
• Wallet attribution, high-risk counterparties, and fund tracing.
• Chargeback-prone gateways and payment method risks.

Case Study, The Large Withdrawal: Participants review a withdrawal request with a mixed funding history, deciding whether to approve or escalate, and justifying their decision against monitoring criteria.

Evidence Standards for Payment Proof

• Acceptable evidence types: statements and uninterrupted recordings.
• Authenticity checks on documents, captures, and metadata.
• Recording what has been verified and what remains unchecked.

Lab, Evidence or Artifact: Teams categorize a set of submissions into acceptable evidence, insufficient evidence, and probable fabrication, specifying what additional information is needed.

Disputed Evidence and Interbank Delays

• Resolving cases where both parties provide seemingly valid evidence.
• Waiting periods for interbank processing and preventive holds.
• Documented decision criteria for time-expired orders.

Workshop, Both Sides Are Right: Teams resolve a dispute where both buyer and seller hold apparently genuine proof, defending the final outcome.

Action and Sanctions Playbook

• Freezing collateral, restricting accounts, and suspensions.
• Deadlines for partial payments and returns to originating accounts.
• Handling refunds to incorrect banks: fees and resolution timeframes.
• Restricted balances and retention of new deposits.

Exercise, Drafting Sanctions: Participants create the action plan, notice, and timeframe for three escalating cases, testing them against the playbook criteria.

Case Management, Documentation, and Escalation

• Case files, internal notes, and evidence retention.
• The escalation matrix and review by department heads.
• Reporting suspicious activity and record-keeping requirements.

Capstone: End-to-End Fraud Case

• Order review, evidence assessment, and identity revalidation.
• Escalation, sanctions decisions, and counterparty resolution.
• Writing a justification memo and undergoing peer review.

Capstone, Full Case Simulation: 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 action protocols and sanctions criteria.