Why Flagright Is the Best AML Platform for Stablecoin Companies

Stablecoins; cryptocurrencies pegged to fiat currencies, have exploded in adoption, blurring the line between traditional finance and crypto. Global regulators are responding by bringing stablecoin activities firmly inside the AML/CFT regulatory perimeter. In practice, a fintech handling USDC or USDT is now expected to uphold nearly the same anti-money laundering standards and oversight as a bank handling cash transfers. For example, the GENIUS Act of 2025 would explicitly put stablecoin issuers under Bank Secrecy Act obligations, requiring full AML/sanctions programs, KYC for all customers, ongoing transaction monitoring, suspicious activity reporting, and even technical capability to freeze illicit on-chain transfers. In short, stablecoin businesses must operate with bank-level compliance rigor to meet new regulatory expectations.

At the same time, mainstream financial players are embracing stablecoins for payments. Mastercard and Visa now facilitate stablecoin settlements, and even major banks have begun issuing their own stablecoins. Fintechs are building hybrid payment platforms bridging fiat and stablecoin rails, letting users transact in USD or USDC interchangeably. This convergence promises speed and efficiency, but it doubles the compliance complexity for financial institutions.

Dual Rails, Double the Complexity

Supporting both fiat and stablecoins isn’t as simple as adding another currency, it introduces significant compliance and operational challenges. Many institutions end up with fragmented toolsets: one system for blockchain transactions and another for fiat bank transfers. Compliance teams then juggle separate rule sets and case queues for each rail, which is inefficient and risks blind spots. A stablecoin transfer might trigger alerts under crypto-specific red flags (e.g. wallet risk scores, smart contract activity) while a wire transfer is evaluated against entirely different criteria. The result is inconsistent oversight where illicit activity could slip through the cracks, or conversely a flood of duplicate alerts from siloed systems.

Regulators have made clear that AML/CFT controls must cover both rails comprehensively. That means:

• Sanctions Screening: Every transaction, whether a SWIFT wire or an on-chain stablecoin transfer, must be screened against sanctions and watchlists.
• Transaction Monitoring: Suspicious patterns like structuring or rapid layering of funds should be detected across fiat and crypto channels alike.
• KYC and Audit Trails: Full customer due diligence and audit logs are expected regardless of payment method to prevent anonymous misuse of stablecoins.
• Reporting: Fis must be ready to file SARs/STRs for suspicious crypto transactions just as they do for fiat and document their compliance actions.

Meeting these requirements on dual rails with disconnected systems is daunting and costly. Clearly, a new approach is needed to unify compliance across fiat and stablecoin payments.

Unified Compliance Across Fiat and Stablecoin Rails

The ideal solution is a unified platform that applies consistent AML controls to all transaction types. Instead of maintaining parallel rulebooks and monitoring tools, a unified system provides one set of rules, one case management process, and a single source of truth for both fiat and crypto activity. In a unified approach, a €10,000 SEPA transfer and a 10,000 USDC on-chain transfer feed into the same monitoring engine and alert dashboard, governed by the same risk thresholds where appropriate.

Flagright’s AI-native AML compliance platform exemplifies this unified approach. With a single API integration, Flagright ingests data from all rails in real-time, card swipes, ACH and SWIFT transfers, as well as on-chain events from blockchains like Ethereum or Stellar. This real-time monitoring covers all on-chain and off-chain activity: from card payments and wire transfers to stablecoin wallet flows, all in one system. Suspicious behavior, say a user rapidly moving funds between bank accounts and crypto wallets, is detected as a single pattern and generates one alert for the compliance team to investigate. Investigators review fiat and crypto transactions side by side in one case interface, applying a unified workflow and risk model without toggling between tools. Every action is logged in one place for audit, and alerts funnel into one queue, eliminating duplicate effort and gaps in oversight.

Critically, a unified platform can respond in real time across both rails. Flagright’s high-performance rule engine operates with sub-second response times, so a blockchain transaction can be screened and risk-scored instantly just like a card swipe. If a risky pattern emerges on-chain or off, it’s caught and flagged immediately for review or blocking. The unified architecture also means uptime and scalability are managed centrally, Flagright boasts 99.99% availability across its global infrastructure, ensuring compliance controls stay uninterrupted even during peak crypto trading bursts. This reliability is crucial for hybrid fintechs that might handle thousands of euro and USDC transactions per second.

By consolidating compliance, financial institutions have seen dramatic improvements. With all rails under one system sharing intelligence, false positive alerts can be drastically reduced. In Flagright’s case, replacing siloed monitoring with a unified platform led to 93% fewer false positives and major cost savings. A single platform can see the full context of customer activity and more smartly distinguish true risks from noise, especially in the fast-moving stablecoin arena. Overall, unifying fiat and crypto compliance yields a stronger risk posture, it’s much harder for bad actors to hide in the seams between separate systems.

Adapting to Unique Stablecoin Risks with Dynamic Rules

Stablecoin transactions can vary greatly between customers and over time, so static one-size-fits-all rules tend to either miss anomalies or trigger too many alerts. Flagright addresses this with dynamic behavioral analytics that establish an expected baseline for each customer and flag deviations. By using statistical measures like medians, means, and standard deviation, the system learns a user’s normal transaction pattern (typical amounts, frequency, counterparties) and can automatically detect outliers beyond that personal norm. For example, if a user typically sends 5 transfers a week averaging $500 each, a sudden burst of twenty $5,000 transfers would be flagged as an anomaly relative to their history. These techniques essentially enable dynamic thresholds that adjust to each customer, rather than a fixed $10k rule for everyone. According to industry best practices, layering in user-specific behavior signals helps surface risks that wouldn’t be visible under one-size-fits-all rules while also reducing noise from legitimate high-value transactions by historically big senders.

In September 2025, Flagright rolled out automated anomaly detection as part of its rule engine. This includes pre-built rules that use statistical baselines (e.g. comparing recent activity to a customer’s historical average or standard deviation) across metrics like transaction volume, frequency, average size, and even round-number amounts. The system can automatically fine-tune thresholds to each customer’s profile, eliminating the need for compliance teams to manually set dozens of static limits for stablecoin transactions. The result is fewer false positives and greater sensitivity to truly unusual activity, since the alert triggers “learn” what’s normal for each user and adapt as behavior evolves. By continuously comparing new transactions against a moving baseline, compliance teams can catch spikes or abnormalities in stablecoin usage that generic rules might overlook. This dynamic rules capability is especially valuable in the volatile crypto environment, where transaction patterns can shift rapidly with market trends.

Strengthening Risk Governance and Audit Trails

With regulators demanding bank-level rigor from stablecoin issuers, Flagright has enhanced its platform’s governance controls to ensure every compliance decision is auditable and under control. Recent improvements introduced comprehensive version control for risk models and configuration changes. Every time a risk scoring factor or risk level definition is modified, the platform now requires a comment describing the change, and it logs a new version. Compliance officers can access a full version history of risk factor configurations (and even restore a previous version if needed) to see what was changed, when, and by whom. This creates an audit trail for all risk model adjustments, crucial when regulators ask for evidence of how your risk assessment methodology has evolved and why. It also supports internal governance, as any tweak to how stablecoin transactions are risk-weighted or which thresholds constitute “High Risk” must go through proper justification. Flagright’s risk scoring module even allows downloading the entire change history of customer risk assessments (CRA), including which underlying transaction risk scores (TRS) or KYC risk scores (KRS) changed at each update. This gives compliance teams a detailed record of why a customer’s overall risk rating changed over time, for example, if a surge in on-chain volume bumped their risk from Medium to High, the exported history will show the contributing factor.

To further enforce control, approval workflows can be put in place for critical actions. Flagright now lets organizations define which changes require peer approval before taking effect. For instance, any modification to risk scoring parameters (like adjusting the weight of on-chain transaction volume in the score) can be set to require a second compliance manager’s approval. Similarly, updates to sensitive user profile fields, e.g. marking a user as a Politically Exposed Person (PEP), or changing their KYC verification status, can be configured with up to two levels of approval needed. This ensures no single analyst can unilaterally lower a user’s risk level or whitelist a stablecoin address without oversight. Such maker-checker controls are a regulatory expectation for robust compliance programs and help prevent internal errors or malicious changes.

All these governance features create a strong second line of defense. They give stablecoin businesses confidence that their risk policies are applied consistently and transparently. And if regulators come knocking, the team can easily produce a complete audit trail of rules, risk models, and user status changes, demonstrating proactive management of compliance controls.

Enhanced Screening Precision for Crypto Transactions

Screening customers and transactions against sanctions and watchlists is a fundamental pillar of AML compliance, now equally expected in the stablecoin realm. Flagright has introduced several enhancements to improve screening accuracy and efficiency, helping compliance teams avoid misses as well as alert overload:

• Screening Profiles: Rather than a blanket one-size-fits-all screening of every name against every list, Flagright allows creating customized screening profiles that target specific categories or sources. For example, a stablecoin issuer can set up a profile that focuses only on major sanctions lists and PEP lists, excluding minor watchlists for efficiency. Profiles can be assigned to different rules or workflows, e.g. high-risk customers get screened against all global lists, whereas low-risk customers use a streamlined profile. This profile-based screening means teams can optimize relevance and reduce false positives. (Notably, the platform now comes with a default screening profile that includes all available sanctions, regulatory enforcement, PEP, and adverse media sources enabled, ensuring out-of-the-box comprehensive coverage. All screening rules must have a profile attached, so nothing slips through unwatched.)
• Partial Name Matching: A new improvement in 2025 ensures that even shortened or partial name inputs can trigger an exact match. If an investigator searches a name like “John Wick,” the engine will recognize if that name is a subset of a longer watchlist entry (e.g. “John Babayaga Wick”) and flag it as an exact hit. This prevents scenarios where a bad actor’s name might go unnoticed just because an alias or middle name wasn’t included in the search. Compliance analysts can enable “partial match” in screening rules to catch abbreviated names, a useful feature since individuals involved in crypto transactions often use nicknames or might be listed with full legal names on sanctions lists. With this change, shortened names won’t evade detection.
• Fuzzy Matching for Short Names: Name-screening algorithms that use fuzzy matching (like Levenshtein distance) can struggle with very short names, where even a one-letter difference is significant. Flagright added a configurable “short name adjustment” which essentially allows one-character mismatches for names below a certain length threshold. For example, with this enabled, “Jon” would match “John” despite one letter difference, whereas normally that might fall outside a 85% similarity cutoff. This tweak is based on a fuzziness floor calculation, e.g. at 15% fuzziness, any name ≤6 characters can have one char variance【user content】. It improves hit rates for short or commonly misspelled names in watchlists, which is valuable when screening global stablecoin user bases that include many diverse name variations.
• Numeric Pattern Matching: Traditionally, sanctions/PEP screening has focused on names and entities, but now Flagright’s engine also considers numeric patterns during matching. This is important for crypto compliance because certain illicit actors or entities might be identified by numbers (for instance, vessel hull numbers, taxpayer IDs, or alphanumeric codes). With this enhancement, if a watchlist entry contains a significant number or code (say a specific passport or ID number tied to a banned person), the screening will catch references to that number in user data or transaction details. It broadens the net of detection to cover numeric identifiers that could be present in blockchain addresses or payment memos related to stablecoin transactions.
• Transaction and Counterparty Screening Flexibility: The platform provides fine control over when to perform screening on a transaction and its counterparty details. Compliance teams can choose to screen at transaction creation, on update, or both. For instance, if a stablecoin transaction’s details (like counterparty wallet info) get updated after initial creation, the rule can trigger a second screening upon that update. This ensures no changes slip through unscreened, while also allowing performance tuning (e.g. maybe only screen on creation to reduce load). Additionally, Flagright improved how counterparty names are tracked with payment details, if a counterparty (say, a frequent business recipient) is whitelisted in one context (with a specific account or wallet), the system will not automatically trust the same name appearing in a different context. This prevents a situation where a name’s presence on a whitelist for one wallet address causes alerts to be missed when that name shows up elsewhere with a new address or bank account. Each name+payment identifier combination is treated distinctly, which is crucial in crypto where the same entity could use multiple wallets.

Together, these screening enhancements give stablecoin compliance teams higher precision and confidence. They can cast a wide net (all relevant lists) but with intelligent matching that catches tricky variations and new patterns, all while keeping false hits manageable. The platform’s screening module is also continuously updated, for example, the latest regulatory enforcement and sanctions lists are automatically included as they are released. With robust screening policies in place, stablecoin issuers can more easily block illicit addresses or names and satisfy sanctions obligations worldwide.

Streamlining Investigations and Case Management

Given the fast pace and global reach of stablecoin transactions, compliance teams need efficient workflows to triage alerts and investigate suspicious activity quickly. Flagright’s platform includes an integrated case management system that has seen multiple upgrades to streamline operations:

• Unified Alert Inbox: All alerts, whether triggered by fiat or crypto activity, appear in one centralized queue. This unified view prevents analysts from needing to switch contexts and ensures a stablecoin-related alert gets the same attention as a fiat one. Analysts can sort and filter alerts with improved search capabilities, for example, filtering by a specific transaction reference or by tags. The new transaction reference filter lets investigators jump directly to a particular transfer by ID or reference number, which is useful when responding to inquiries or tracing a suspicious on-chain transaction ID through the system.
• Immediate “In Progress” Status: Alerts generated by monitoring rules can now be configured to open with an In Progress status automatically. This means the moment an alert is created (say a large stablecoin transfer triggers a red flag), it’s already marked as being worked on, or can be auto-assigned, without an analyst having to manually change its status. This small tweak saves time and integrates with workflows where certain alerts should go straight into review by Level 2 analysts or trigger specific response procedures immediately.
• Rich Case Documentation (Attachments & Notes): Investigators often gather evidence like screenshots of blockchain explorers, ID documents, or chat logs when analyzing an alert. Instead of storing these separately, Flagright now allows users to simply drag and drop screenshots or other images directly into the case comments. The system will automatically convert them into attachments associated with the case. This makes it effortless to include visual evidence of a suspicious crypto address or proof of a customer’s ID right in the case file. Along with that, every comment and action in a case is time-stamped and attributed to a user, building a solid audit trail for investigative work.
• Linked Entities View: For businesses dealing with institutional clients or complex customer hierarchies (common in fintech and crypto), understanding relationships is key. Flagright introduced an enhanced Linked Entities table for business customers, which displays parent-child linkages (e.g. a corporate customer and its beneficial owners or subsidiaries) along with each entity’s key info, KYC status, risk level, tags, etc. This makes it easier to assess group-wide exposure at a glance. Furthermore, a new search enhancement allows analysts to input a parent entity’s ID and retrieve all related child entities’ transactions, alerts, and cases. If a stablecoin exchange has multiple linked entities under one group, an investigator can pull up everything related in one go, ensuring no related account is overlooked during an investigation.
• Investigation Checklists and QA: Quality assurance is vital in compliance operations to ensure no alert is closed improperly. Flagright’s case management now supports investigation checklists that analysts must complete (customizable lists of tasks/questions) before closing an alert or case. These checklists now include a “Not Applicable” option for items and allow QA reviewers to leave individual comments per checklist item. For example, if one checklist step is “Verify source of funds,” and it doesn’t apply to a particular crypto wallet alert, the analyst can mark N/A, and the QA reviewer can see that decision and comment if needed. Additionally, any QA review outcomes, pass or fail, along with comments, are visible directly in the alert/case interface. This transparency helps analysts learn from feedback and ensures consistent standards. It also means when looking back at a closed stablecoin-related alert, the team can immediately see why QA flagged it or what rationale was given for closure.
• Direct User Attribute Updates: Often during an investigation, new information comes to light that should update the customer’s profile (for instance, discovering a user is actually a PEP, or deciding to blocklist a user after a confirmed suspicious incident). Instead of navigating to a separate module, compliance officers can now update key user profile attributes right from the case closure screen. Fields like KYC status, account status (active/suspended), PEP status, sanctions status, or adding tags can be edited on-the-fly when closing an alert. Analysts can even add the user to a watchlist (e.g. flag the customer as needing enhanced due diligence in future) directly in that workflow. These changes can be accompanied by a reason note. This streamlines the process of acting on investigation findings, for example, if a stablecoin address is confirmed linked to fraud, the investigator can mark that user as “Suspended” and tag them appropriately as part of closing the case, without missing a beat.

In sum, these features accelerate the end-to-end investigation timeline. Alerts are easier to triage, cases easier to document and review, and outcomes (like blocking a user or improving procedures) can be implemented immediately. For stablecoin compliance teams dealing with potentially high volumes of alerts, these efficiencies are crucial to keep up with fast-moving risks.

Comprehensive Crypto Coverage and Risk Scoring

As the stablecoin ecosystem evolves, Flagright has kept pace by expanding support for new networks and enhancing crypto-specific risk scoring:

• Wider Blockchain and Asset Support: Flagright continuously adds new cryptocurrency networks and tokens to its monitoring coverage. For instance, support was added for networks and coins including DASH, SUI, THETA, ETHFI, POL, POWR, RUNE, FTM, PENGU and more. While these are not stablecoins per se, this reflects the platform’s agility in covering a broad range of digital assets. More importantly, mainstream stablecoins (like USDC, USDT, DAI, etc.) on major blockchains were already supported, and any new stablecoin issued on added networks can be readily monitored. This ensures that whether a stablecoin transaction occurs on Ethereum, Stellar, Binance Smart Chain, or a newer chain, Flagright can ingest and analyze it. The platform also integrates with leading blockchain analytics providers (Chainalysis, Elliptic, TRM Labs) to enrich crypto transaction data with risk intelligence like wallet reputation or exposure to illicit activities. For a compliance team, this means they get alerts not only on transaction patterns but also on risky wallet addresses (e.g. a destination address that has been flagged for darknet market links by Chainalysis can trigger an alert upon a stablecoin payment).
• Wallet and Transaction Risk Scoring: Every on-chain transaction can carry risk indicators, for example, interacting with a sanctioned wallet, using mixing services, abnormal transaction patterns, etc. Flagright’s Customer Risk Assessment (CRA) model accounts for both inherent user risk factors and behavioral factors (transactions). Recent improvements allow compliance officers to manually re-run risk scoring for all customers on-demand or schedule periodic recalculations. This is useful if new risk data comes in (say a new sanctions designation affecting some wallets, or adding a new risk factor for crypto exposure), the team can trigger an immediate CRA update to reflect the latest risk posture across their user base. The system also supports automatic daily/weekly/monthly re-runs that only execute if risk factors have changed, ensuring up-to-date risk ratings without unnecessary processing. Historical transaction risk scores are preserved, so trend analysis remains intact even as CRAs update. Furthermore, a Risk Scoring Simulator tool allows testing changes to risk logic on a sample of up to 100,000 customers before deploying them. Compliance teams can run A/B comparisons of their current model vs. a proposed new model (for instance, increasing the weight of large stablecoin transfers in the risk score) and see the impact on overall risk distribution (e.g. how many users would move to High Risk). This simulator supports multiple algorithms, equal weighting, custom weights, or moving averages, to model different scenarios. It even produces reports that can be downloaded as evidence when seeking management or regulator approval for the new risk approach. By using these tools, stablecoin issuers can fine-tune their risk scoring to better detect high-risk users (like those engaging in suspicious crypto transactions) while minimizing unwarranted risk inflation.
• Custom Whitelists and Tag-Based Rules: Sometimes compliance teams maintain “whitelists” of trusted entities (addresses, vendors, etc.) to reduce noise. Flagright now enables creating custom whitelists with user-defined data columns. For instance, a team could create a whitelist of known legitimate stablecoin liquidity providers, with columns for their wallet addresses, names, and a review expiration date. This whitelist can then be referenced in rules (e.g. if counterparty is on LiquidityProviderWhitelist, maybe do not generate an alert for large transfers). The ability to define custom columns means the list can store whatever attributes are needed (like a risk score or comments), tailoring it to the institution’s specific use case. On the flip side, the rules engine also got more powerful with numeric tag operations, if users or transactions are tagged with numeric values (say a “Lifetime Volume” tag, or “Days Since Last KYC Refresh”), the rules can treat those numbers quantitatively (greater than, less than, etc.). A practical example: tag each customer with the total USD value of stablecoin transactions in the past 30 days, then set a rule to alert if that tag exceeds a certain threshold and the user’s risk rating is medium/high. This kind of logic allows combining dynamic monitoring with business-specific context captured in tags.

All these capabilities ensure that a stablecoin compliance program on Flagright is equipped to monitor the full spectrum of crypto risks. The platform stays updated with the crypto landscape, provides intelligent risk scoring that merges fiat and crypto behaviors, and gives teams the flexibility to incorporate their domain knowledge (via whitelists, tags, and custom rules) into the monitoring framework.

Conclusion

The rapid rise of stablecoins in mainstream finance has ushered in a new era of regulatory expectations, one where crypto transactions are held to the same compliance standards as traditional banking. This brings challenges in monitoring, risk assessment, and operations, especially when dealing with the dual rails of fiat and blockchain. However, modern unified platforms like Flagright offer a path forward. By consolidating compliance controls across all payment types and continuously innovating with features like dynamic anomaly detection, advanced screening, and rigorous governance tools, Flagright enables organizations to stay ahead of stablecoin risks without drowning in inefficiency. The platform’s latest improvements, from real-time rules that adapt to user behavior, to audit-ready change logs and AI-assisted analysis, are purpose-built to address the pain points of stablecoin compliance. Financial institutions can thus confidently embrace stablecoins and digital assets as part of their services, knowing that their compliance infrastructure is as agile, integrated, and robust as the new world of payments requires. With the right technology in place, compliance teams can turn the looming regulatory burden into a streamlined process that not only satisfies examiners but also curbs financial crime in this evolving domain.