Brad Levy warns cross-chain compliance is crypto’s AML gap

Cross-chain compliance gaps at blockchain bridges are crypto’s most dangerous AML blind spot, ThetaRay CEO Brad Levy says.

Compliance teams monitoring crypto transactions lose the trail the moment assets cross a blockchain bridge. Brad Levy, CEO of ThetaRay, calls this the Cross-Chain Compliance Gap, the blind spot that emerges when funds move from Ethereum to a Layer 2 or alternative chain and the transaction data fragments at the crossing point.

“Somewhere between where Ethereum ends and an L2 or alternative chain begins, the data becomes fragmented as the money moves through blockchain bridges,” Levy said. In 2026, real transaction volumes are scaling through these routes and legacy banks are encountering a frontier their AML systems were never built for.

Why blockchain bridges are the gap no one is watching

TRM Labs has documented that most illicit actors in 2026 move assets through bridges and privacy tools within minutes. The structural problem: retail bank AML sees fiat, blockchain analytics tools see the crypto side, and neither sees the bridge.

“No one sees the bridge,” Levy said. “Since ThetaRay’s AI is agnostic to the rail, it provides the connective tissue that monitors the behavioral fingerprint of the individual across both worlds.”

ThetaRay recently flagged a UK retail customer declared as a packer, an occupation not associated with high-volume financial activity. The system found she had received over £134,000 from nearly 40 counterparties, including nine companies with no previous history, then executed regular crypto purchases multiple times a month, often on consecutive days.

“While traditional rule-based systems would have classified these as isolated transfers, our AI connected the dots and flagged them as an unlicensed crypto exchange or illicit investment portal,” Levy said.

Crypto.news has reported on AML becoming the dominant enforcement axis in crypto in 2026, with fines exceeding $900 million in the first half of 2025 alone.

How criminals use chain-hopping to reset their financial history

Levy describes L2s and blockchain bridges as reset buttons, resetting the financial history of funds at each hop. By the time a legacy bank flags a fiat withdrawal as suspicious, the money has already moved through multiple chains.

“Criminals understand that a retail bank’s AML system isn’t talking to a Solana explorer in real time,” Levy said. “They reset their financial history by leveraging the complexity of L2s and bridges.”

Crypto.news has tracked CertiK research showing AML enforcement overtook securities classification as the primary risk axis for crypto businesses in 2026.

What the next two years will demand from banks and regulators

Levy’s outlook for the next 12 to 24 months is a structural shift he calls “converged monitoring,” collapsing separate Retail AML and Crypto Risk teams into a single AI-driven overlay that tracks an individual’s behaviour across all transaction types.

“Having separate teams for Retail AML and Crypto Risk will no longer be a viable strategy,” Levy said. The overlay he foresees maintains a risk profile for each individual continuously, not just when they cross a monitored threshold on a single rail.

Crypto.news has covered the US Treasury proposing AML rules for stablecoin issuers under the GENIUS Act, treating payment stablecoin operators as financial institutions under the Bank Secrecy Act.

Levy sees the direction as unambiguous. “If there are any blind spots between fiat and crypto over the next year, they will be viewed as governance failures,” he said.