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Cryptocurrency exchange Coinbase (NASDAQ: COIN)has secured a new patent for a system that flags up non-compliant user accounts, according to details of a filing emerging today.

The filing with the U.S. Patent and Trademark Office (USPTO) is dated November 19, and explains a system that allows the firm to automatically identify non-compliant accounts through a process of compliance scoring.

The system “determines a compliance score for each one of the accounts based on the respective factors associated with the respective account,” before comparing this against the score on other accounts to highlight discrepancies.

According to the documentation filed with the patent, the system would then automatically identify suspected compliance fails, before reviewing them to assess whether the account should be closed, or whether it should be allowed to remain open.

The system could potentially help tighten up Coinbase’s own internal processes for managing compliance, an important part of upping the regulatory integrity of the industry.

According to the filing, the system would make it straightforward for a human investigator to determine where accounts were being used for suspicious activities.

“An investigator may be able to determine whether an account is being used for illicit activities by doing research on the parties of the transaction who receive or send payment and determining whether such parties are regularly involved in illicit activities. It may for example be relatively easy to determine that a party sending or receiving payment is in the business of conducting online services that may be illegal.”

The patent could help Coinbase reduce the risks of theft and fraud in the cryptocurrency sector. According to reports from the third quarter of 2019, crypto fraud cost an estimated $4.4 billion on the year.

The filing comes at a time of increasing pressure from regulators and the cryptocurrency industry to shore up compliance across the sector, including improved KYC and anti-money laundering processes.

With crypto criminality and fraud still rife with some cryptocurrencies, the Coinbase patent could lead to a stricter compliance environment to help weed out problem users.

The filing is only the latest to be lodged by Coinbase, which already holds a number of cryptocurrency patents.

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