291. The nature of blockchain and other distributed ledger technology means that most VA transactions are recorded on a ledger, and some information may be publically available. Blockchain analytical tools can be used to understand certain aspects of these transactions. A number of jurisdictions are using, or exploring using, blockchain analytics services to assist with their supervision. The services can be used in a number of ways, including to pinpoint areas that supervisors may wish to focus on during assessments in individual firms and helping to categorise the highest risk firms based on their activity, as well as in assessing more strategic and global risks to support developing of risk-based regulations and development of national ML/TF risk assessments. While such tools can support risk monitoring and supervision, using such tools requires financial resources and requires recruitment and training of a workforce able to use such tools [FATF delegations may wish to refer to the 2019 Heads of FATF FIU Forum Virtual Assets Project Paper as a resource]. Additionally, not all VAs are covered by all vendors. Blockchain analytics are also widely used by VASPs and some FIs to monitor their own exposure to risk (e.g. transactions that have passed through mixer or tumbling services or that have originated from known illicit websites), so supervisors should understand how they function in order to adequately assess a VASP's implementation of their risk-based framework and internal controls.

292. Supervisors that use blockchain analytics should consider how the use of the data derived from these solutions meets the data protection requirements in their jurisdictions.

9.4.1. Singapore