Glossary

A comprehensive reference of key terms used throughout BlockchainAnalysis.io documentation, covering compliance, regulatory, blockchain, and DeFi terminology.

Compliance and Regulatory Terms

AML — Anti-Money Laundering

A set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML requirements typically include customer identification, transaction monitoring, and suspicious activity reporting. In the crypto space, AML applies to VASPs, exchanges, and other regulated entities.

KYC — Know Your Customer

The process of verifying the identity of customers before or during the establishment of a business relationship. KYC is a core component of AML compliance and involves collecting identity documents, verifying addresses, and assessing the customer's risk profile. In crypto, KYC is required by most regulated exchanges and VASPs.

KYB — Know Your Business

Similar to KYC, but applied to business entities rather than individuals. KYB involves verifying the legal existence, ownership structure, beneficial owners, and regulatory status of a corporate customer. Required when onboarding institutional clients or business accounts.

VASP — Virtual Asset Service Provider

As defined by FATF, a VASP is any entity that conducts one or more of the following activities: exchange between virtual assets and fiat currencies, exchange between virtual assets, transfer of virtual assets, safekeeping/administration of virtual assets, or participation in financial services related to virtual assets. VASPs are subject to AML/CFT regulations in most jurisdictions.

SAR — Suspicious Activity Report

A report filed by a regulated entity with its national Financial Intelligence Unit (FIU) when a transaction or pattern of transactions is suspected to involve money laundering, terrorist financing, or other criminal activity. In the US, SARs are filed with FinCEN. In the UK, they are filed with the NCA.

STR — Suspicious Transaction Report

Similar to a SAR but focused specifically on individual transactions rather than broader activity patterns. Some jurisdictions use the term STR instead of or in addition to SAR. The reporting thresholds and criteria vary by jurisdiction.

CTR — Currency Transaction Report

A report required in the US (filed with FinCEN) for any cash transaction exceeding $10,000. While originally designed for traditional finance, CTR-like reporting requirements are being extended to crypto in some jurisdictions. Some VASPs voluntarily apply CTR-equivalent thresholds.

OFAC — Office of Foreign Assets Control

A division of the US Department of the Treasury that administers and enforces economic sanctions programs. OFAC maintains the SDN (Specially Designated Nationals) List, which includes individuals, entities, and crypto wallet addresses. Transacting with OFAC-designated addresses is prohibited for US persons and entities. BlockchainAnalysis.io screens against the OFAC SDN list in real time.

MiCA — Markets in Crypto-Assets Regulation

A comprehensive EU regulatory framework for crypto-assets, adopted in 2023 and phased into effect from 2024–2025. MiCA establishes licensing requirements for CASPs (Crypto-Asset Service Providers), rules for stablecoin issuers, and consumer protection measures. It is the first major jurisdiction-wide crypto regulatory framework.

AMLA — Anti-Money Laundering Authority

The new EU authority (established under the AML Package alongside MiCA) that will directly supervise the highest-risk obliged entities, including large cross-border CASPs. AMLA will coordinate national FIUs and set harmonized AML standards across the EU. Headquarters in Frankfurt, Germany.

FCA MLR — Financial Conduct Authority Money Laundering Regulations

The UK regulatory framework requiring crypto-asset firms operating in the UK to register with the FCA and comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (as amended). Firms must implement AML/KYC programs, conduct risk assessments, and file SARs.

FinCEN — Financial Crimes Enforcement Network

A bureau of the US Department of the Treasury that collects and analyzes financial transaction data to combat money laundering, terrorist financing, and other financial crimes. FinCEN administers the Bank Secrecy Act (BSA) and requires MSBs (including many crypto businesses) to register, implement AML programs, and file SARs and CTRs.

VARA — Virtual Assets Regulatory Authority

Dubai's dedicated regulatory authority for virtual assets, established in 2022. VARA issues licenses for crypto exchanges, brokers, custodians, and other VASPs operating in Dubai. It has its own compliance framework with specific requirements for AML, market conduct, and consumer protection.

MAS — Monetary Authority of Singapore

Singapore's central bank and financial regulatory authority. MAS regulates crypto service providers under the Payment Services Act (PSA), requiring them to obtain a Major Payment Institution (MPI) or Standard Payment Institution (SPI) license. MAS has strict AML/CFT and Travel Rule compliance requirements.

FATF — Financial Action Task Force

An intergovernmental body that sets international standards for combating money laundering, terrorist financing, and proliferation financing. FATF's Recommendations (particularly Recommendation 16, the "Travel Rule") are adopted by member countries and serve as the global baseline for AML/CFT regulation. FATF also publishes guidance specifically for virtual assets and VASPs.

Travel Rule

FATF Recommendation 16, which requires VASPs to collect, retain, and transmit originator and beneficiary information for virtual asset transfers above a certain threshold. The information typically includes names, account numbers, and addresses of both parties. Implementation varies by jurisdiction — some apply it at $1,000 (US), others at EUR 1,000 (EU under MiCA).

EDD — Enhanced Due Diligence

A higher level of due diligence applied to customers or transactions that present elevated risk. EDD goes beyond standard KYC and may include additional identity verification, source-of-funds documentation, ongoing monitoring, and senior management approval. Triggers include PEPs, high-risk jurisdictions, and unusual transaction patterns.

CDD — Customer Due Diligence

The standard level of due diligence applied to all customers during onboarding and at regular intervals throughout the business relationship. CDD includes verifying identity, understanding the nature of the business relationship, and assessing risk. CDD is the baseline; EDD applies when risk is elevated.

PEP — Politically Exposed Person

An individual who holds or has held a prominent public function (e.g., head of state, senior politician, judicial official, military officer, senior executive of a state-owned enterprise). PEPs and their close associates/family members are considered higher risk for money laundering due to their position and influence. PEP screening is a mandatory component of KYC/AML programs.

TF — Terrorist Financing

The provision or collection of funds with the intention or knowledge that they will be used to carry out terrorist acts. CFT (Countering the Financing of Terrorism) regulations require financial institutions and VASPs to screen for and report suspected terrorist financing activity.

CFT — Countering the Financing of Terrorism

The set of laws, regulations, and procedures aimed at preventing terrorist organizations from using the financial system to fund their activities. CFT is typically coupled with AML in legislation (referred to as AML/CFT). VASPs must screen against terrorist financing lists (OFAC, UN, EU) and report suspicious activity.

Blockchain and Crypto Crime Terms

Mixer / Tumbler

A service or smart contract that pools cryptocurrency from multiple users and redistributes it to break the on-chain link between the sender and recipient. Mixers are used for privacy but are frequently associated with money laundering. Examples include Tornado Cash (Ethereum), Wasabi Wallet (Bitcoin), and ChipMixer (Bitcoin). Many mixers have been sanctioned by OFAC.

Chain Hopping

A money laundering technique where illicit funds are moved across multiple blockchains (using bridges, DEXes, or cross-chain swaps) to obscure the trail. For example, converting stolen ETH to BTC via a DEX, then bridging to BNB Chain, then converting to USDT. BlockchainAnalysis.io's cross-chain tracking detects chain hopping patterns.

Peel Chain

A money laundering technique commonly seen on Bitcoin (UTXO chains) where a large amount is sent through a long chain of transactions, "peeling off" small amounts at each step to different wallets while the bulk continues to the next address. The small amounts are eventually cashed out at exchanges or P2P services. Also known as "peeling."

Dusting Attack

An attack where tiny amounts of cryptocurrency ("dust") are sent to a large number of wallets. The attacker then monitors the on-chain movement of the dust to de-anonymize wallet owners by linking addresses together. If a user consolidates dusted UTXOs with their main holdings, the attacker can link the addresses. Dusting can also be used for phishing (sending tokens with malicious contract addresses).

Smart Contract

A self-executing program deployed on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. Smart contracts power DeFi protocols, NFT marketplaces, DAOs, and many other blockchain applications. They are immutable once deployed (unless they use a proxy pattern) and execute deterministically.

DeFi and Trading Terms

DeFi — Decentralized Finance

A category of financial applications built on public blockchains that operate without centralized intermediaries. DeFi includes lending/borrowing (Aave, Compound), decentralized exchanges (Uniswap, SushiSwap), yield farming, derivatives, and insurance. DeFi protocols are typically governed by smart contracts and DAOs.

DEX — Decentralized Exchange

A cryptocurrency exchange that operates without a central authority, using smart contracts to facilitate peer-to-peer trading directly from users' wallets. DEXes include automated market makers (AMMs) like Uniswap and order-book exchanges like dYdX. DEX trades are on-chain and do not require KYC in most cases.

CEX — Centralized Exchange

A cryptocurrency exchange operated by a centralized company that acts as an intermediary between buyers and sellers. CEXes (e.g., Binance, Coinbase, Kraken) hold custody of user funds, maintain order books, and are subject to regulatory requirements including KYC/AML. CEX trades are off-chain until withdrawal.

TVL — Total Value Locked

The total value of assets deposited in a DeFi protocol's smart contracts, measured in USD (or another fiat currency). TVL is a widely used metric for assessing the size and adoption of DeFi protocols. For example, "Aave has $10B TVL" means $10 billion worth of assets are deposited in Aave's lending contracts.

Impermanent Loss

The unrealized loss that occurs when providing liquidity to an AMM-based DEX (e.g., Uniswap), compared to simply holding the assets. Impermanent loss happens when the price ratio of the paired tokens changes from the ratio at the time of deposit. It is "impermanent" because the loss is only realized when the LP position is withdrawn. The greater the price divergence, the larger the impermanent loss.

Slippage

The difference between the expected price of a trade and the actual executed price. Slippage occurs in both CEX and DEX trading, but is more pronounced on DEXes with low liquidity. High slippage can result from large trade sizes relative to pool liquidity or rapid price movements between transaction submission and execution.

MEV — Maximal Extractable Value

The maximum value that can be extracted from block production beyond the standard block reward and gas fees, by including, excluding, or reordering transactions within a block. MEV extraction techniques include frontrunning (placing a transaction before a large trade to profit from the price movement), backrunning, and sandwich attacks. MEV is a significant concern in DeFi, as it can result in worse execution prices for users.

Flash Loan

An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If the loan is not repaid by the end of the transaction, the entire transaction reverts as if it never happened. Flash loans are used for arbitrage, collateral swaps, and self-liquidation, but have also been exploited in DeFi attacks (e.g., price oracle manipulation, governance attacks). Available on protocols like Aave and dYdX.

Additional Terms

Cluster

In blockchain analytics, a cluster is a group of addresses that are determined to be controlled by the same entity. Clustering is performed using heuristics such as common-input-ownership (for UTXO chains), deposit address detection, and behavioral analysis. BlockchainAnalysis.io uses clustering to extend entity labels across related addresses.

Risk Score

A numeric value (0–100) assigned by BlockchainAnalysis.io to a blockchain address, representing the assessed risk of interacting with that address. The score is computed from 11 independently weighted factors including entity match, counterparty exposure, transaction patterns, and sanctions screening. See Risk Score.

Entity

In the context of BlockchainAnalysis.io, an entity is a real-world organization, service, or actor associated with one or more blockchain addresses. Entities are categorized (exchange, mixer, scam, etc.) and assigned threat levels. See Entity Database.

Threat Level

A qualitative risk classification assigned to an entity in the BlockchainAnalysis.io database: none, low, medium, high, or critical. Threat levels reflect the assessed risk of the entity based on regulatory status, historical incidents, and category.

Cost Basis

The original value of an asset for tax purposes, typically the purchase price plus any associated fees. When the asset is disposed of (sold, swapped, spent), the capital gain or loss is calculated as the difference between the proceeds and the cost basis. See Cost Basis Methods.

FIFO — First In, First Out

A cost basis accounting method where the oldest acquired tokens are assumed to be disposed of first. Widely used in the US (IRS) and many other jurisdictions. See DeFi Tax Report for detailed examples.

WAC — Weighted Average Cost

A cost basis accounting method where all holdings of the same token are pooled and the cost basis is the total acquisition cost divided by the total quantity. Required in the UK (HMRC Section 104) and Australia (ATO). See DeFi Tax Report for detailed examples.

UTXO — Unspent Transaction Output

The transaction model used by Bitcoin and similar blockchains (Litecoin, Bitcoin Cash, Dogecoin). Each transaction consumes previous outputs and creates new ones. The "balance" of an address is the sum of its unspent outputs. UTXO analysis is fundamental to blockchain forensics, as common-input-ownership heuristics are used for address clustering.

EVM — Ethereum Virtual Machine

The runtime environment for smart contracts on Ethereum and compatible blockchains (BNB Chain, Polygon, Arbitrum, Optimism, Avalanche, etc.). EVM chains share the same address format (0x + 40 hex characters) and smart contract standards (ERC-20, ERC-721), which is why chain selection is needed when screening EVM addresses.