AML Compliance Guide for Lenders

In its most basic definition, Lenders are defined as an individual, a public or private group, or a financial institution that provides funds to a person or business with the expectation that the funds will be repaid. Today, the number of both leasing and digital leasing organizations is increasing. The increase in these institutions can bring complexity and financial crimes with it. For this reason, especially in the developing world, lending institutions need to know the risks of crimes and understand AML regulations and regulators to be protected from financial crimes. Here you will be able to guide every corner of the ever-evolving Leasing landscape.



AML Challenges for Lenders

Lenders, Credit Unions, Digital Lenders, Lending Firms, Invoice Finance Firms, P2P Lending Platforms may face some major difficulties in customer recruitment processes, customer transactions, and monitoring ongoing customer behavior. Criminals are constantly involved in committing financial crimes, so Lenders must be constantly vigilant to prevent crimes in the face of these challenges. Of course, technology has an answer for this, and they can overcome these difficulties with Artificial Intelligence-supported Anti Money Laundering and Counter-Terrorism Financing solutions.


Financial Crime Risks in Lending Industry

The digital world and software are disrupting every industry, and one of them is undoubtedly Lending Industry. With Lenders' development, the number and volume of customers are increasing, and financial crime risks also increase. When applying for a lender loan, people can hide their real identity and try to trade with a fake identity. Incomplete identity verification systems may not be able to detect these people, which can be disastrous for the organization.In addition, lenders that are unaware of the regulations may unwittingly allow criminals to take advantage of regulatory gaps. 



There are risks of financial crime like these, and Lenders must implement Anti-Money Laundering and Anti-Terrorism Financing regulations in their clients' recruitment processes and monitor ongoing customer behavior to minimize their risks. In this way, they can both protect themselves and follow the regulations closely.


Understanding AML Regulations for Lenders

All regulated Lending companies must comply with the AML / CTF regulations prepared by the regulators. Some regulators provide regulations for member states such as FATF, EU regulators, and some prepare regulations for their own country, such as MASAK. Not all regulations are the same but may contain similar laws. According to FATF regulations, Lenders must comply with these regulations. So what are these regulations?


 

First, to comply with an AML regulation, organizations must have an AML compliance program. AML compliance program essentially requires a risk-based approach. Lending companies should implement AML measures according to their risk level.



Following the risk-based approach, Customer Due Diligence measures should be implemented for new and existing customers. In lending companies, it is vital to know who each person requesting credit is and identify these people's risks. Taking this precaution from the very first step is a great method to prevent future crimes. Some customers may be at high risks, such as Political Exposed People (PEP); a special screening may be required for these customers, which is called Enhanced Due Diligence (EDD) measures.



Unfortunately, just knowing the customer is not enough to prevent risks. Real-time transaction monitoring procedures are also required to prevent risks. So what is Transaction Monitoring? If Transaction Monitoring detects any suspicious transaction during transactions, it stops it and brings it to the authorized compliance team. These alarms, reviewed by the compliance team, if identified as indeed suspicious. A suspicious Activity Report is prepared about this process, and these reports are sent to the necessary authority institution.



Lending companies that are obliged to comply with the regulations must have a compliance team to ensure that the AML program is complied with and carry out the works within the scope of AML. Due to the dynamic nature of the regulations, these people and the institution's employees should be trained periodically. The compliance team should be aware of the regulators' red flags, and if these red flags occur, they should immediately take action.

 
Anti-Money Laundering Compliance Solutions for Lenders

In this changing and developing world, artificial intelligence-supported solutions have an important place in our lives. It is also important for Lenders to comply with AML regulations and protect themselves against financial risks such as money laundering. Complying with AML laws and creating a good AML compliance program is quite complicated, but don't worry about it; meet the Sanction Scanner AML solutions and relieve your pain.


AML Name Screening

With our PEP and Sanctions Screening Service, you can meet global and local AML obligations and avoid legal fines. They can perform Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures by regulations.



AML Transaction Monitoring

You can create your rules and scenarios at your own risk without any coding knowledge, so you can automatically detect high-risk and suspicious activities.


Don't hesitate to contact us or request a demo, minimize your financial crime risks.


Previous Post
Al Capone: The One Who Gives Us The Term 'Money Laundering'
Next Post
Customer Scorecard in Transaction Monitoring