1 in 4 Risky Transactions Could Be Missed, Study Reveals KYT Tool Gaps
The Role of KYT Tools in Detecting Financial Crime Risks
As stablecoins become increasingly central to cross-border payments, the need for robust mechanisms to detect financial crime risks has never been more critical. A recent study conducted by MetaComp Pte Ltd, a major payment institution licensed by the Monetary Authority of Singapore (MAS), has evaluated the effectiveness of leading on-chain Know-Your-Transactions (KYT) tools in identifying Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) risks across major blockchains. The findings reveal significant vulnerabilities in how crypto transactions are currently screened for financial crime risk.
The research analyzed 7,000 live and randomly selected transactions on Ethereum and Tron using four leading KYT providers: Chainalysis, Elliptic, Merkle Science, and Beosin. By comparing results across single-tool, dual-tool, three-tool, and four-tool screening configurations, the study found that up to 25% of high-risk transactions were not flagged when relying on only one or two KYT tools. This highlights critical gaps in transaction monitoring and underscores the risks associated with insufficient tooling in regulated digital asset environments.
Screening Practices Under Scrutiny
The study focused on real-world transactions involving USDT and USDC, the two most widely used stablecoins in global payment flows, across Ethereum and Tron blockchains. MetaComp’s analysis compared the effectiveness of using one to four KYT tools per transaction and found that a three-tool approach significantly improves risk detection while maintaining processing speed suitable for real-time environments. This offers a scalable and practical model for institutional compliance.
According to Tin Pei Ling, Co-President of MetaComp, "For institutions operating in a regulated environment, especially those dealing with stablecoin flows, it is no longer sufficient to rely on a single tool for transaction screening. This research provides evidence that layering multiple KYT tools can significantly reduce blind spots and strengthen the integrity of on-chain payment ecosystems."
Key Findings: Accuracy Improves with Layered Screening
The study found that relying on a single KYT tool can result in up to 25% of high-risk transactions being missed, meaning one in four potentially suspicious transactions may go undetected due to limited screening coverage. These high-risk transactions often involved exposure to sanctioned wallet addresses, stolen funds, darknet-linked activity, coin mixers, and fraud-related schemes—each of which typically triggers reporting or escalation requirements.
In contrast, a three-tool screening model lowered the false clean rate to below 0.10%, while maintaining screening speeds under two seconds per transaction. This makes it a practical and scalable solution for production environments requiring near-instant results.
The research also identified five systemic weaknesses across the industry that contribute to screening inconsistencies: fragmented risk coverage across different tools, inconsistent risk categorisation, a lack of standardised outputs, operational complexity in reconciling results, and processing latency introduced by multi-tool setups.
Ethereum vs. Tron: Differing Risk Profiles
The study observed that Ethereum-based transactions showed lower AML/CFT risk signals than Tron in the sampled dataset. Specifically, 6.95% of Tron transactions were flagged as severe risk compared to 0.70% on Ethereum, with more than 20% of Tron transactions assessed at medium-high risk or worse.
While the study did not evaluate blockchain protocols themselves, the findings underscore the need for differentiated compliance strategies based on network-specific transaction behavior.
"We're not comparing blockchain technologies, but rather the nature of the transactional risk flowing through them," added Tin Pei Ling. "Each KYT provider sees different parts of the risk landscape. For institutions, relying on a single perspective is no longer viable—reconciling multiple signals is critical to maintaining regulatory trust."
Stablecoins in Focus for Institutional Risk Management
USDT and USDC were selected for this study given their prominence in institutional use cases such as remittance, settlement, and merchant payments. MetaComp recommends that a minimum of three on-chain KYT tools be simultaneously implemented for each transaction to strike an optimal balance between AML/CFT effectiveness, cost, and processing efficiency.
Analysis shows that using only one or two tools can result in up to 25% of high-risk transactions being incorrectly cleared—exposing critical compliance gaps. While three tools provide effective baseline coverage, MetaComp has adopted a four-tool setup across its CAMP and StableX platforms, raising the standard to deliver enhanced risk detection and stronger regulatory alignment.
Methodology and Scope
The analysis was conducted using 7,000 real and randomly selected transactions involving USDT and USDC across the Ethereum and Tron blockchains. The sample transactions were drawn from live blockchain data on June 26 and 27, 2025, with all MetaComp internal activity intentionally excluded to preserve research independence.
Screening was conducted using four KYT tools—Chainalysis, Elliptic, Merkle Science, and Beosin—selected for their data coverage, typology specialisation, regional intelligence, and integration capabilities.
To address the limitations of fragmented vendor data, MetaComp applied a proprietary screening methodology comprising:
- Standardised risk category mapping
- Unified risk parameter configuration aligned with regulatory expectations
- A multi-tool screening workflow that includes initial screening, direct exposure assessment, transaction-level exposure analysis, and wallet-level risk profiling
While the dataset represents a point-in-time snapshot, the findings offer directional insight into how different KYT screening configurations perform under real-world conditions. The decision to limit the sample to two stablecoins and two blockchains reflects MetaComp’s focus on real-world cross-border flows and the screening costs associated with running multi-tool setups.
About MetaComp
MetaComp is a leading licensed cross-border FX and digital assets infrastructure provider headquartered in Singapore and licensed by the Monetary Authority of Singapore (MAS) under the Payment Services Act 2019. Operating on a P2B2C (platform-to-business/partners-to-clients) model, MetaComp empowers institutions, payment service providers, fintechs, and global enterprises to navigate the evolving cross-border payments and digital asset economy with confidence.
With a strong emphasis on compliance, security, and institutional-grade infrastructure, MetaComp delivers an end-to-end suite of digital finance solutions—including OTC and exchange trading, fiat payment rails, regulated digital asset custody, and prime brokerage services. MetaComp is a subsidiary of Alpha Ladder Finance Pte. Ltd., a MAS-licensed Capital Markets Services (CMS) licensee and Recognised Market Operator (RMO).
Through its proprietary Client Asset Management Platform (CAMP), MetaComp provides a secure, integrated environment that bridges traditional finance with digital assets. MetaComp's latest innovation, StableX, is a next-generation cross-border FX and liquidity routing infrastructure designed to simplify and accelerate global fund flows. Powered by stablecoins and USD, StableX intelligently optimises multi-currency conversions and settlements, enabling faster, more cost-effective, and highly competitive cross-border transactions. As the FX layer within CAMP, StableX combines the programmability of digital assets with the reliability of regulated infrastructure, delivering a scalable, compliant, and seamless ecosystem for the future of global finance.
