Automating Chainalysis Workflows: How to Integrate Chainalysis KYT with AuthsignaI to Mitigate Crypto Crime and Streamline Operations

Chainalysis is a blockchain analytics platform that provides critical intelligence and compliance solutions for cryptocurrency transactions. At its core, Chainalysis specializes in tracking blockchain transactions, identifying suspicious activities, and providing risk assessment through its Know Your Transaction (KYT) service. This enables organizations to screen cryptocurrency transactions in real time, ensuring compliance with regulatory requirements while preventing fraud and other illicit activities.

Chainalysis KYT assigns risk scores for each User ID, with ratings that range from LOW, MEDIUM, HIGH, to SEVERE. This simple system helps you quickly understand how risky a transaction might be and respond accordingly.

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How Authsignal Enhances your Chainalysis KYT workflow

Chainalysis is great at spotting risky transactions, but identifying risk is only half the solution. With Authsignal, you can immediately act on those risk alerts, such as requesting extra verification when something looks suspicious.

Authsignal’s integration connects Chainalysis's risk detection directly to Authsignal actions, creating a streamlined single API call to manage both security and crypto crime risk. On-top of that you’re able to orchestrate outcomes like challenge flows including re-KYC if the transaction meets your rules managed policies.

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What You Get:

1. Instant Response: When Chainalysis identifies suspicious activity, you can immediately trigger additional verification with Authsignal.
2. No Coding Needed: Visual editor makes it simple to set up security rules without development resources.
3. Smart Authentication: Apply appropriate verification methods like biometrics, passkeys, TOTP based on the actual risk level of each transaction.
4. Re-KYC: Need to re-KYC the customer Authsignal provides biometrics re-authentication that can match the customer back to the original ID verified photograph.
5. Proactive Protection: Identify and stop suspicious activity before funds transfer, rather than dealing with fraud after the fact.

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Setting It Up

Getting started is straightforward:

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1. Connect Chainalysis

To integrate Chainalysis with Authsignal:

1. Create an Authsignal account if you don't already have one and login
2. Navigate to Settings → Marketplace
3. Choose "Chainalysis" from Marketplace integrations and click “Set up Chainalysis”

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4. Enter your Chainalysis API Key in the provided field and activate it.

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That's it! The connection is now established and you're ready to start configuring your rules.

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2. Set Your Rules

Once connected, you'll need to create rules to determine how your system responds to Chainalysis risk data:

1. Navigate to the Actions section in your Authsignal Portal
2. Click Configure a new action
3. Enter an action name (e.g., "Crypto Withdrawal") and click Configure action

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After creating your action, you'll come to the Rules section, where you'll set up specific conditions for when this action should trigger

1. Create a new Rule for the Sanctioned Address.

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2. Now, in the rules page, choose the desired outcome (such as "Allow," "Block", "Challenge", or "Review") and save it. We chose “Block” for this example.

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3. Now, in the conditions section, click "Add feature”.
4. Then in the dialog box, choose “Crypto” category and then choose “Address is sanctioned”.

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5. Set the condition "crypto.isSanctioned” to true and save the rule.

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6. You can create additional rules based on Chainalysis risk scores as well. For example: "If User ID Risk Score is SEVERE, require review”

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You can combine multiple rules and conditions to create a comprehensive security framework tailored to your risk tolerance and user experience goals.

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3. Test It Out

Before deploying your rules to production, you can test them directly in the Authsignal Portal:

1. Navigate back to your configured action
2. Scroll down to the testing section
3. Click "Track a test action"
4. Enter test data to simulate a transaction with Chainalysis risk factors

For example, you can use this sample data to test a sanctioned address rule:

{
  "userId": "mV6wx0LOXtYOz16il9FV3enqdMc2",
  "redirectUrl": "https://yourapp.com/callback",
  "crypto": {
    "address": "0x1da5821544e25c636c1417ba96ade4cf6d2f9b5a"
  }
}

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You can see that the user with a sanctioned address has been blocked.

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You can adjust your rules and test different scenarios until you're confident in your security configuration.

That's it! You've successfully implemented the Chainalysis integration with Authsignal. Your crypto security system is now ready to automatically identify and respond to high-risk transactions based on Chainalysis's industry-leading blockchain intelligence.

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Real-World Example

Here's how this works in practice:

A customer on your exchange tries to withdraw crypto to an external wallet. Behind the scenes:

1. The withdrawal request triggers an Authsignal check
2. Authsignal uses your Chainalysis KYT API key to query about the destination wallet
3. Chainalysis returns risk information about the address based on the User Risk Score.
4. Based on your rules, Authsignal requests appropriate verification from the user
5. If it's a legitimate customer, they complete verification and continue. If it's a fraudster, they're stopped

This all happens in seconds, so legitimate customers experience minimal delay.

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How This Helps Your Crypto Business

This integration delivers several important benefits:

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Operations Benefits:

• Reduced Manual Reviews: Automate risk assessment and verification processes.
• Scalability: Handle increasing transaction volumes with consistent security.

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Security Benefits:

• Proactive Protection: Prevent fraud before funds leave your platform.
• Risk-Based Security: Apply appropriate security measures based on actual risk.
• Comprehensive Coverage: Address multiple threat vectors from account takeovers to money laundering.

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Customer Experience Benefits:

• Targeted Friction: Apply additional verification only when necessary.
• Faster Processing: Reduce delays from manual reviews.
• Trust Building: Demonstrate security commitment without unnecessary disruption.

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Wrapping Up

By combining Chainalysis's risk detection with Authsignal's step-up authentication capabilities, you can enhance protection while maintaining a smooth experience for legitimate users.This integration helps you build a platform where legitimate customers experience minimal friction while suspicious transactions receive appropriate scrutiny.

With regulatory requirements around cryptocurrency becoming more stringent, these tools are increasingly essential for sustainable operation.

Ready to protect your platform? Contact our team today to get started.