Last Updated on August 2, 2022 by Tabraiz
Money laundering or the moving of dirty money through a legal system has been the most preferred way for criminals. Since the inception of legal systems, criminal minds had always sought sophisticated methods to beat strict security measures. But this used to be the way for several years. Now, with the introduction of sophisticated AI-powered anti-money laundering solutions, criminals can’t get away that easily.
However, as technology became the forefront for defense – it also became a tool for offenders. Meaning, the technology that was new a day ago could be outsmarted easily by criminals in mere days. So, experts realized that tech without constant innovation wouldn’t last very long. This meant putting layers upon layers of security methods to ensure that the entire system is unbreachable.
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Know Your Customer
For this reason, anti-money laundering (AML) compliance is coupled with KYC (Know Your Customer). This method is proven to help banks and financial institutions to screen their customers for criminal background. As it happens, the automated system quickly scans through various watchlists – with the minimum human effort involved. Moreover, the bitter fact of manual work is that it generates more losses and less accuracy with the results.
With that said, there is still a question regarding what’s new and what’s most preferable about Anti-money laundering compliance?
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What is AML Compliance?
Have you ever seen the movie, named “The Infiltrator”? Although the movie tends to spice up the details, there’s still a lot that explains people about money laundering and outsmarting money launderers. Identifying and reducing anomalies with money laundering efforts, requires both precision and constantly monitoring customer activities. This is what anti-money laundering compliance means on the surface level.
But an anti-money laundering solution has the ability to go beyond. Customers either new or old, are constantly screened against global watchlists, such as PEP lists and sanction lists. However, AML screening comes under KYC (Know Your Customer) verification.
The risk of money laundering consistently grows stronger, as criminals are taking non-anticipated ways to launder money. Newest and favorite platforms for money launderers are the exchange of products and services in crypto-currencies. But the old favorite among money launderers remains the banks.
Because banks are the best and most legit way, preferably among other sectors that link directly to the legal institutions. Criminals masterminds use different stages of Money launder – among which are placement, layering, and integration are the most popular. However, the question remains why opting for this compliance is important for global businesses.
Why Businesses Should Adopt Anti-Money Laundering Compliance?
To stop criminal activities, laws in various countries are becoming stringent with each passing day. But, anti-money laundering compliance is not just another regulation that organizations are obliged to practice. AntiMoney laundering compliance is the most primary safeguard for banks and other businesses to stop risk in their tracks.
Leading Towards Financial Loss With Non-Compliance
Failure to comply with Money laundering laws and regulations could charge organizations with massive fines and penalties. Although the price to pay for non-compliance is quite high – the brands could also lose their reputation within days. Moreover, businesses also risk losing their credit ratings. For instance, Swedbank is founding guilty of money laundering in the eyes of legal institutions. The bank had a fierce legal battle ahead and ended up losing billions off its market value.
Increasing Customer Trust by hire Anti-Money Laundering Compliance
Customers are reluctant to trust businesses that keep them secured from any fraud threats. It’s necessary to increase a loyal customer base and expand the brand value. For instance, if banks fail to comply with anti-money-laundering compliance – they could risk losing their customer base and market value.
Rising Fraud Risks can be prevented by using Anti-Money Laundering Compliance
Fraud is becoming a growing concern for industries across various countries. However, as the power of technology grew massively – This type of laundering risks have also expanded multiple folds. Criminals are not taking any time out and so the businesses should be preparing in advance to tackle these threats. Antimoney laundering compliance and KYC (Know Your Customer) screening are preventing such fraud risks. On the contrary, businesses face massive chargebacks.
Antimoney laundering compliance is both necessary and mandatory for businesses to generate massive trust among their customer base. It would eventually help organizations to expand their market value and prevent any losses with non-compliance. Moreover, organizations could get a hold of criminal activities and prevent the circulation of dirty money inside a legitimate system.
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