A blockchain is open, and a coin's path is visible end to end. The check is built on exactly that: dedicated services label addresses and calculate what share of the funds arrived from questionable sources.
What it looks like for the customer
Usually like nothing at all: the check runs in the background and takes seconds. It becomes visible in two cases — when an exchange is paused pending clarification, and when the service asks you to explain where the funds came from.
Where risk comes from for an honest person
A coin may have passed through a questionable address before reaching you, and part of that trail stays with it. Funds received from platforms without verification, or from anonymous mixers, therefore raise questions more often — even when the recipient has nothing to do with any of it.
How to lower the risk in advance
Receive funds from known sources: exchanges that run verification, an employer, a service you already use. Avoid platforms promising an exchange that leaves no trace — those are exactly the ones funds with a history pass through.
You can check an address yourself before sending: open risk-scoring services exist, and they show the same picture the exchange will see.
What to do if an exchange is paused
Do not disappear. A check needs an explanation, not silence: an exchange statement, a screenshot of your transaction history or a contract will do. A refusal to answer reads only one way to the service, and its rules on that are strict.
Read more: The exact signals that make a bank stop a transfer