Chainalysis Integration

As crypto finance grows, meeting worldwide regulatory demands and ensuring secure transactions has become more challenging. Businesses now face stricter Anti-Money Laundering (AML) rules, which call for streamlined and effective integration with real-time transaction monitoring solutions. Dfns addresses this need by integrating compliance checks in a way that goes deeper than standard implementations.

Dfns is excited to announce its integration with Chainalysis, the blockchain data platform. Together, we’ve developed a real-time solution for transaction monitoring, compliance, and security, built to keep up with changing crypto regulations. This integration offers our clients precise screening of both inbound and outbound transactions, helping them identify and reduce risks effectively. With flexible policy controls and real-time transaction checks, Dfns gives businesses the tools they need to confidently handle AML requirements. This partnership highlights our shared focus on security, trust, and innovation in the crypto space.

This blog post covers the technical aspects of the Dfns-Chainalysis integration, highlights what has been delivered so far, and outlines future developments.

Unlocking the full potential of KYT

At the heart of the integration is a seamless flow of Chainalysis data directly into Dfns’ policy engine, enabling clients to screen and manage inbound and outbound transactions.

Real-time screening for better security

By using Chainalysis' extensive risk and sanctions data, Dfns' built-in integration allows for real-time transaction screening, lowering the risk of fraud compared to traditional methods. This proactive system helps businesses spot and handle potential threats before they affect operations. Real-time screening can identify high-risk funds entering a wallet, helping companies improve transparency and prevent illegal activities that could result in fines or legal trouble.

This feature is crucial for businesses in high-risk industries or regions with strict compliance requirements. A real-time response lets companies act swiftly, preventing delays or disruptions that could harm their operations. It applies to both incoming and outgoing transactions. When a transaction is flagged as suspicious, clients have options based on their policy settings:

• Blocking Outbound Transactions: Clients can set up a policy to block or require approval for outgoing transfers if flagged by Chainalysis as high-risk.
• Analyzing Inbound Transactions: Clients can set up webhooks with Chainalysis transaction data to evaluate inbound transactions and take necessary actions based on screening results.

Granular policy controls for risk management  

Dfns gives businesses full control over their risk management strategies with detailed policy settings. A company facing high-risk exposure can set stricter transaction rules for specific regions or entities, while a company with lower risk can choose more relaxed settings. This flexibility allows each organization to customize its approach to fit their unique needs and regulatory requirements.

On a technical level, these policies work with Chainalysis data to ensure your wallet operations are based on the latest insights. You can block certain addresses or flag specific transaction types, enabling you to customize your compliance and security measures without complicating operations.

Clients have detailed control over their wallet policies, allowing them to define how transactions are monitored and managed. Policies can block or notify based on different risk levels (e.g., LOW, MEDIUM, HIGH, SEVERE). This functionality, available today, includes specific configurations for UTXO-based and account-based chains:

• UTXO Chains: Only clean UTXOs (those passing screening) are used in transactions, while suspicious ones are blocked.
• Account-Based Chains: Suspicious balances are kept separate from clean funds, ensuring only clear balances are used for transfers.

Customizable levels of integration 

Two levels of integration are currently available:

• Non-Blocking, Non-Restrictive Integration: This version of the integration screens transactions and provides notifications without blocking any actions. Clients can configure webhook events to trigger internal processes or alerts. This allows for full flexibility.
• Blocking, Restrictive Integration: This more stringent configuration blocks outbound transactions and enables to freeze flagged inbound funds. It enhances the wallet's awareness to ensure compliance, essential for businesses in regulated industries.

User-friendly activation and policy setup 

Activating Chainalysis in the Dfns dashboard is quick and easy—all you need to do is enter an API key. Most users complete the setup and configure their first policies in less than 10 minutes, making the onboarding process simple and allowing businesses to quickly start monitoring transactions. Dfns handles the integration automatically, encrypting the API key and instantly connecting transaction monitoring policies for smooth operation.

Unlike other solutions that require manual setup or developer help, Dfns offers a fully native integration. This reduces activation time and makes the process much more user-friendly compared to platforms that need more hands-on configuration.

Why native integrations matter

Many wallet providers claim to offer blockchain analysis service integrations, but often these are superficial, requiring significant extra development on the client’s side. This leaves clients struggling to build additional tools, leading to inefficiencies and security risks. With Dfns and Chainalysis, the integration is deep and native, feeding directly into Dfns' policy engine without the need for extra steps or customization.

This seamless integration ensures Chainalysis data flows directly into Dfns' policy framework, providing instant, actionable insights. Unlike other platforms, Dfns doesn’t require additional infrastructure to process the data, making the integration more functional and user-friendly.

By eliminating the need for complex custom development, Dfns saves businesses weeks of development time and reduces security risks. Other integrations often require clients to add extra layers to manage compliance, but Dfns’ native integration removes this burden, allowing businesses to focus on scaling instead of compliance challenges.

Trust through collaborations

The Dfns-Chainalysis integration is more than just a technical achievement; it represents the strong trust between two leading teams, offering clients a seamless solution that combines the best of both platforms. This partnership highlights the growing importance of collaboration in the crypto and fintech sectors, where security and compliance are critical for businesses expanding their footprint. By working together, Dfns and Chainalysis provide a unified approach to addressing these challenges, strengthened by their shared commitment to security, transparency, and regulatory standards.

Both companies are trusted by industry leaders, and their integration gives common clients the confidence that their wallets are vetted, secure and compliant, reflecting their combined strength in the marketplace.

The future of wallets is compliant 

As cryptocurrency regulations tighten globally, transaction monitoring integrations have become essential rather than optional. Recent reports show an increase in regulatory actions within the crypto space, emphasizing the need for strong compliance measures. The tightening of AML (Anti-Money Laundering) rules in regions like the European Union (through MiCA regulations) and the United States (via FinCEN guidelines) highlights the necessity for wallet providers to adopt transaction monitoring solutions, such as those offered by Chainalysis.

More upgrades are on the way, including:

• Freeze and Unfreeze Wallets: Wallet freezing and unfreezing aren’t available yet but are planned for future updates. These will include wallet history, event tracking, and approvals for unfreezing funds on a per-wallet basis.
• Fine-Grained Transaction Filters: Soon, clients will be able to filter transactions by criteria like amount, asset, or destination address, giving businesses greater control over alert triggers.
• Org-Level AML Settings: Organizations will soon be able to customize AML settings at the organizational level, including timeout preferences and fallback options if transaction monitoring providers are unavailable.

This integration is not just another feature; it represents a key milestone in the crypto industry's maturity. Moving forward, strong partnerships between wallet services and KYT providers will be vital in building a secure, compliant, and trusted ecosystem.