Shinhan Bank said on Wednesday it will build the banking industry’s first on-chain monitoring system by adopting blockchain compliance firm BonanzaFactory’s KYT (Know Your Transaction) solution, TranSight.

TranSight is a solution that analyzes transaction information and wallet addresses on blockchains to detect risk signals of financial crimes such as money laundering and voice phishing.

On-chain monitoring analyzes transaction histories recorded on blockchain networks to check the path of fund transfers and links between wallets. It is characterized by managing digital asset transaction risks by analyzing wallet addresses on blockchains along with transaction flows.

Shinhan Bank plans to use the TranSight rollout to analyze the risk level of wallet addresses related to digital assets, including stablecoins, and to build a linkage system with its bank systems so the analysis can be used for anti-money laundering work.

A Shinhan Bank official said, "We are proactively putting in place internal control systems that banks can prepare to brace for the potential expansion of digital asset-based financial services such as stablecoins." The official added, "We will incorporate on-chain data analysis capabilities into anti-money laundering work to create a safe financial transaction environment in the digital asset sector as well."