What are the risks of AML in crypto exchanges? Are there any regulations here? Also, if there are AML red-flag indicators in Crypto exchanges, what are these red- flag indicators?

Crypto exchanges routinely require lots of very sensitive information - passport pages, driving license, id card, etc.

However there is no way to find if the documents submitted are genuine or not.

For ex. to verify that a new customer claiming to be a Warren Buffer the exchange has to pull and compare the driving license form the one stored in the state DMV, then pull and compare the passport with the one stored in the US State Dept, and pull and compare the tax returns with the ones stored in US IRS.

Most exchanges do not have access to government databases so that the current system relies on the declaration that the documents submitted are true and correct.

In addition, only law enforcement agencies can confirm that the sources of funds of an individual are legit - and only after an investigation.

The vast amount of ID data of is valuable for hackers not only on private levels but for friendly-nation and adversary nations levels.

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