New York's financial regulator has asked banks to use blockchain analytics to crack down on illegal activities

The New York State Department of Financial Services (NYDFS) issued guidance on Wednesday requiring banks to adopt blockchain analytics technology to combat illegal activities. Adrienne Harris, NYDFS Superintendent of Regulation, said that as traditional banking institutions expand into virtual currency businesses, its compliance function must adapt to the new situation and introduce new tools and technologies to mitigate new risks. The guidance particularly highlights the importance of using blockchain analytics tools in areas such as customer wallet risk screening, digital asset product threat and risk assessment. The requirement is designed to prevent illegal activities such as money laundering, terrorist financing and sanctions evasion.