Crypto mining pools and money laundering

In the last few years, some bad actors have turned to crypto mining pools to facilitate money laundering since mining provides a way to get funds from a clean on-chain source. Sanctioned nation states like Iran have used these tactics, as has Lazarus Group, a North Korean hacking syndicate. More recently, ransomware actors and crypto scammers have begun doing the same. This problem can be mitigated if, in addition to KYC, mining pools and hashing services establish more stringent wallet screening measures, and use blockchain analysis to see where users’ funds originate in order to reject crypto from illicit addresses. Exchanges must also consider the full exposure profile of wallets sending funds. As mining is a core function for all PoW blockchains, mining pools and exchanges must enact controls to prevent the mining process from criminal compromise.