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

P2P Exchange Operations and the Fraud Risk Landscape

• The escrow-based order lifecycle and asset release mechanisms.
• Identifying exposure points: off-platform fiat versus on-platform cryptoassets.
• Consequences of fraud losses, including chargebacks and bank claims.

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

Regulatory Framework and Supervisory Expectations

• FATF Recommendations, VASP obligations, and the implementation of the travel rule.
• Roles of cryptoasset supervisory authorities and exchange house 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 payments, and the reuse of payment proof.
• Manipulation of amounts, including partial, altered, or visually similar figures.

Case Study, Five Recurring Patterns: Participants analyse real anonymised dispute records against five key typologies to identify the control failures in each instance.

False Confirmations, Forged Receipts and Account Takeover

• Marking orders as paid without actual fund transfers.
• Use of edited screenshots and falsified bank receipts.
• Cross-phishing in order chats and credential theft.
• Reusing hijacked accounts to defraud other users.

Workshop, Phishing in the Order Chat: Teams distinguish between genuine and fraudulent support messages, then draft a takedown and revalidation plan for the affected account.

KYC for Individuals: Level 1 and Level 2

• Data capture and identity document verification at Level 1.
• 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, documenting discrepancies that necessitate revalidation.

KYC for Legal Entities and Beneficial Ownership

• Reviewing corporate documents, representation powers, and signatory authority.
• Analyzing beneficial ownership chains and control indicators.
• Assessing risk factors for legal persons and conducting periodic reviews.

Identity Fraud and Document Forensics

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

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

AML Screening, Sanctions and PEP

• List matching techniques, tolerance levels, and managing false positives.
• Identifying PEPs, assessing adverse media, and verifying source of wealth.
• Applying enhanced due diligence and defining escalation thresholds.

Customer Risk Assessment and the Risk-Based Approach

• Evaluating customer, product, channel, geographical, and behavioural risk factors.
• Establishing risk ratings, review triggers, and treatment decisions.
• Calibrating due diligence efforts to the actual level of risk.

Transaction Monitoring and Blockchain Analytics

• Withdrawal approval criteria: account age, KYC status, and transaction history.
• Wallet attribution, identifying high-risk counterparties, and fund tracing.
• Managing chargeback-prone gateways and assessing payment method risk.

Case Study, The Large Withdrawal: Participants review a withdrawal request with a complex funding history, decide on approval or escalation, and justify the decision based on monitoring criteria.

Evidence Standards for Payment Proof

• Defining acceptable evidence, such as statements and continuous recordings.
• Conducting authenticity checks on documents, captures, and metadata.
• Accurately recording what has been verified and what remains unchecked.

Lab, Evidence or Artifact: Teams categorise submissions as acceptable evidence, insufficient evidence, or probable fabrication, and specify alternative requirements.

Disputed Evidence and Interbank Delays

• Resolving cases where both parties present valid evidence.
• Managing waiting periods for interbank processing and applying preventive holds.
• Applying documented decision criteria for time-expired orders.

Workshop, Both Sides Are Right: Teams resolve a dispute where buyer and seller hold seemingly genuine proof, and defend their final decision.

Action and Sanctions Playbook

• Protocols for freezing collateral, restricting accounts, and suspending services.
• Handling partial payment deadlines and returning funds to originating accounts.
• Managing refunds to incorrect banks, including fee structures and resolution timelines.
• Applying restricted balances and retaining new deposits.

Exercise, Write the Sanction: Participants draft actions, notices, and timeframes for three escalating cases, testing them against playbook criteria.

Case Management, Documentation and Escalation

• Maintaining case files, internal notes, and evidence retention records.
• Utilising the escalation matrix and securing department head reviews.
• Filing suspicious activity reports and maintaining robust record-keeping.

Capstone: End-to-End Fraud Case

• Reviewing orders, assessing evidence, and conducting identity revalidation.
• Executing escalation, sanctions decisions, and counterparty resolution.
• Drafting justification memos and undergoing peer review.

Capstone, Full Case Run: Teams manage a complete simulated case from initial suspicious contact to final resolution, presenting a written justification for peer evaluation.

Diagnostic and Advisory Session (Additional Component)

• Review of current practices and identification of protocol gaps.
• Guidance on evidence standards and handling disputed cases.
• Advice on action protocols and sanctions criteria.