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 asset release mechanisms.
• Identifying exposure points: off-platform fiat currency versus on-platform crypto assets.
• The consequences of fraud losses, chargebacks, and bank claims.

Exercise 1, Mapping Exposure: Teams trace a buy order and a sell order from initiation to release, identifying every point where off-platform payment disrupts the link between identity and funds.

Regulatory Framework and Supervisory Standards

• FATF Recommendations, VASP obligations, and the travel rule.
• Crypto asset supervisory authorities and exchange licensing requirements.
• Managing jurisdictional risk, grey-list monitoring, and sanctions exposure.

Fraud Typologies in P2P Trading

• Payment channel deviations and mismatched payer accounts.
• Triangulation schemes, third-party payers, and reused payment proof.
• Partial payments, altered amounts, and visually similar figures.

Case Study, Five Recurring Patterns: Participants categorize real anonymized dispute records according to five typologies and pinpoint the control that failed in each instance.

False Confirmations, Forged Receipts, and Account Takeovers

• Orders marked as paid without an actual transfer occurring.
• Edited screenshots and falsified bank receipts.
• Cross-phishing in order chats and credential theft.
• Hijacked accounts being reused to defraud other users.

Workshop, Phishing in Order Chats: Teams compare a genuine support message with a fraudulent one, then draft the takedown and revalidation path for the reported account.

KYC for Individuals: Level 1 and Level 2

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

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

KYC for Legal Entities and Beneficial Ownership

• Corporate documents, powers of representation, and signatories.
• Beneficial ownership chains and indicators of control.
• Risk factors for legal entities and periodic review requirements.

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 to identify inconsistencies in font, layout, metadata, and account numbers.

AML Screening, Sanctions, and PEPs

• 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

• Customer, product, channel, geographic, and behavioral factors.
• Risk rating, review triggers, and treatment decisions.
• Scaling due diligence efforts to match actual risk levels.

Transaction Monitoring and Blockchain Analytics

• Withdrawal approvals based on account age, KYC status, and history.
• Wallet attribution, high-risk counterparties, and fund tracing.
• Risk associated with chargeback-prone gateways and payment methods.

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

Evidence Standards for Payment Proof

• Acceptable evidence: statements and uninterrupted recordings.
• Authenticity checks for documents, captures, and metadata.
• Documenting 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 what alternative proof should be requested.

Disputed Evidence and Interbank Delays

• Resolving cases where both parties submit seemingly valid evidence.
• Managing 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 buyer and seller both hold apparently genuine proof, defending the final outcome.

Action and Sanctions Playbook

• Freezing collateral, restricting accounts, and suspending services.
• Deadlines for partial payments and returning funds to the originating account.
• Handling refunds to incorrect banks: fees and resolution timeframes.
• Managing restricted balances and retaining new deposits.

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

Case Management, Documentation, and Escalation

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

Capstone: End-to-End Fraud Case

• Order review, evidence assessment, and identity revalidation.
• Escalation, sanctions decisions, and counterparty resolution.
• Preparing justification memos and conducting peer reviews.

Capstone, Full Case Run: Each team manages a complete simulated case from the first 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.