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.
• Risk exposure: off-platform fiat settlements versus on-platform cryptoassets.
• The consequences of fraud losses, chargebacks, and bank claims.

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

Regulatory Framework and Supervisory Expectations

• FATF Recommendations, VASP obligations, and the travel rule.
• Cryptoasset supervisory authorities and exchange licensing requirements.
• Jurisdictional risks, 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 proofs.
• Partial payments, altered amounts, and visually similar figures.

Case Study: Five Recurring Patterns – Participants classify anonymized real-world dispute records against these five typologies to identify the specific control failure in each instance.

False Confirmations, Forged Receipts and Account Takeover

• 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 genuine support messages with fraudulent ones, then draft the takedown and revalidation path for the affected account.

KYC for Individuals: Level 1 and Level 2

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

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, representation powers, and signatory authorization.
• Beneficial ownership chains and indicators of control.
• Risk factors for legal persons and periodic review requirements.

Identity Fraud and Document Forensics

• Forged, borrowed, and synthetic identities.
• Liveness bypass techniques, deepfake attempts, and injection attacks.
• Revalidation triggers 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, tolerance levels, and managing false positives.
• PEP identification, adverse media analysis, and source of wealth verification.
• Enhanced due diligence and escalation thresholds.

Customer Risk Assessment and the Risk-Based Approach

• Evaluating customer, product, channel, geographic, and behavioral factors.
• Risk rating, review triggers, and treatment decisions.
• Scaling due diligence efforts to the actual risk level.

Transaction Monitoring and Blockchain Analytics

• Withdrawal approvals considering account age, KYC status, and history.
• Wallet attribution, 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 mixed funding history, decide whether to approve or escalate, and justify the decision against monitoring criteria.

Evidence Standards for Payment Proof

• Acceptable evidence types, including statements and uninterrupted recordings.
• Authenticity checks on documents, captures, and metadata.
• Documenting what has been verified and what remains unverified.

Lab: Evidence or Artifact – Teams categorize submissions into acceptable evidence, insufficient evidence, and probable fabrication, specifying what further evidence is required.

Disputed Evidence and Interbank Delays

• Resolving cases where both parties submit seemingly valid evidence.
• Handling waiting periods for interbank processing 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 each hold apparently genuine proof, defending the final outcome.

Action and Sanctions Playbook

• Freezing collateral, restricting accounts, and suspension procedures.
• Managing partial payment deadlines and returns to originating accounts.
• Handling refunds to incorrect banks, including fees and resolution timeframes.
• Managing restricted balances and retention of new deposits.

Exercise: Drafting the Sanction – Participants create 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 processes, sanctions decisions, and counterparty resolution.
• Writing justification memos and undergoing peer review.

Capstone: Full Case Run – Each team handles 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 actions and sanctions criteria.