An illustrative private-bank scenario showing how blockchain evidence can be converted into a compliance-ready onboarding file.
This is an illustrative use case based on the structure of the EY Distributed Ledger Analysis offering. It explains the workflow and division of responsibilities, but does not describe a specific client or claim that a particular bank approved an onboarding application.
A private bank receives an application from a high-net-worth client whose wealth originated in early crypto investments and later DeFi activity. Conventional KYC records can document recent fiat conversions, but they do not explain the full on-chain history, establish control over every declared wallet or resolve historical exposure to higher-risk counterparties.
That gap creates a practical decision problem. The bank needs evidence that its compliance team, risk committee and auditors can review. The client needs a fair assessment that does not treat every bridge, decentralized exchange or privacy-adjacent interaction as disqualifying by default.
Why does crypto-originated wealth challenge conventional onboarding?
Crypto wealth rarely follows a single, linear transaction path. Assets may have moved through Bitcoin, Ethereum, Layer 2 networks, centralized exchanges, decentralized exchanges, staking contracts, liquidity pools and cross-chain bridges over several years. Exchange statements cover activity inside a platform, while public ledgers cover movements outside it. Neither source provides the complete explanation alone.
Single-vendor blockchain analytics can also produce incomplete or conflicting results. Coverage differs by chain, region and attribution dataset. One tool may label a wallet as a virtual asset service provider while another leaves it unidentified or assigns a different risk category. An automated score is therefore evidence to examine, not a complete source-of-funds conclusion.
The EY Distributed Ledger Analysis offering addresses this problem through a vendor-neutral, methodology-led review. EY provides the regulatory, legal and governance framework. Recoveris acts as a technical service provider, supporting the blockchain analysis, cross-tool validation and forensic interpretation required in complex cases.
How does EY DLA convert on-chain activity into a defensible file?
The engagement joins three evidence streams that are often handled separately: Distributed Ledger Intelligence, Control Over Digital Assets and AML risk assessment.
Distributed Ledger Intelligence reconstructs the source of funds
Distributed Ledger Intelligence, or DLI, traces the declared wealth from documented origins to current balances. The analysis reconciles wallet activity with exchange records and supporting off-chain documents, follows relevant movements across blockchains and bridges, and explains DeFi activity such as staking, swaps or liquidity provision where it materially affects provenance.
The purpose is not to force every transaction into a simple narrative. It is to distinguish what can be evidenced, what needs further documentation and what remains unattributable. That separation lets the bank review supported wealth without allowing one unresolved segment to contaminate the entire file.
Control Over Digital Assets verifies the declared wallets
Control Over Digital Assets, or CODA, tests whether the applicant controls the wallets included in the onboarding submission. Structured signing exercises, message attestations or a controlled de minimis transfer can connect the person named in the KYC file to the relevant blockchain addresses without transferring custody of their assets.
Control verification matters because transaction history alone does not establish ownership. A clean wallet that the applicant does not control is irrelevant to the onboarding decision, while an undisclosed wallet may materially change the risk assessment.
AML risk assessment translates evidence into policy decisions
The AML review examines historical counterparties and material exposures against the institution’s policy framework. Sanctions exposure, mixers, darknet markets, fraud-linked addresses, unregulated services and unexplained over-the-counter activity are assessed in context rather than collapsed into one opaque score.
The resulting PASS, FLAG or BLOCK treatment provides a decision trail. Compliance teams can see which evidence supports each conclusion, which issues require enhanced due diligence and which holdings should be ring-fenced or excluded.
What does the bank receive?
The bank receives one structured DLA file rather than several disconnected technical outputs. The file can include a management summary, the DLI source-of-funds report, the CODA verification record, an AML risk overview, transaction-flow exhibits and an evidentiary annex aligned to the bank’s internal policy.
This structure supports a proportionate result. Documented wealth can proceed for review, flagged segments can be escalated, and holdings that cannot be attributed can remain outside the onboarding scope. The final decision remains with the bank and its responsible officers. DLA supplies evidence and analysis; it does not replace the institution’s legal duties or guarantee approval.
What does this use case demonstrate?
The central lesson is that crypto onboarding is a methodology problem, not a software-selection exercise. Banks need multiple data sources, experienced interpretation and a documented route from raw blockchain activity to a policy decision.
EY DLA combines EY’s governance and financial-services expertise with Recoveris’s blockchain intelligence and forensic methodology. The model gives institutions access to specialist capability when case volumes do not justify building and maintaining the same stack internally.
Sources: EY Distributed Ledger Analysis: Beyond Single-Vendor Solutions, EY Distributed Ledger Analysis Services, Recoveris Source of Funds intelligence, and Recoveris services for businesses and VASPs.
Discuss a complex digital asset onboarding case
If your institution needs a defensible review of crypto-originated wealth, contact the Recoveris team to discuss the required evidence and delivery route.
