Anti Money Laundering Compliance in Money Remittances

Nowadays, with the increase in mobile-based payment channels and the development of modern technologies, the global money remittance industry grows. According to sources, the global remittance industry earned $ 689 billion in 2018, and this value will increase, reaching $ 930.44 billion by 2026.

The money remittance system is a financial service, and therefore they carry some risk like other financial services. These risks are financial crimes such as money laundering and terrorist financing. The development and continuing development of the remittance system increase the possibilities of these risks. Remittance systems, a potential target for criminals, have heavy regulation. The main purpose of these regulations is to reduce or eliminate the risks of financial and cybercrime.

Assessing Money Laundering Within The Money Remittance

In the money remittance system, money trasnfer transactions occur very frequently, and these transactions may carry risks such as money laundering and terrorism financing. The main reason for these risks is the crime opportunities offered by digital money remittances services. Some factors can be given as examples of the causes of these risks: Money remittance services are difficult to audit by the required authorities. An anonymous transaction can be carried out in the remittance process; through this anomaly, criminals can launder more money. Financial criminals can send and receive money through remittance services using money mules. These factors increase the risks of money laundering in money remittance systems.

On the other side, there is a crucial point that should be considered, the lack of local or global regulations in the remittance system or the failure of regulators to check regularly creates a gap in the industry, and criminals can evaluate this gap. Furthermore, institutions that provide money remittance services have to also comply with the regulations, not reporting any suspicious transactions to the necessary institutions, not applying the necessary procedures to their customers also increases the risks in this sector.

Money Remittances Sector' Regulations

We have mentioned that there are some regulations in the money transfers system. These remittance service providers may be subject to the regulations of the countries they are located in, and they have to comply with some global money laundering regulations. One of the institutions that have regulations for money transfer in the global sense is FATF, and the other is MONEVYAL. The regulations of FATF and MONEYVAL are valid for their member states. The basis of these regulations is risk assessments, recognition of customers, due diligence, and monitoring of actual transactions.

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an independent body that provides policies and standards to financial systems and develops and supports existing policies to combat financial crime. FATF recommendations exist to counteract money laundering and require sectors such as financial institutions in member states to comply. In addition, FATF Recommendations are accepted as the global AML / CTF standard.


Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) is a Council of Europe body that undertakes the task of evaluating its member countries' compliance with basic international standards against money laundering and financing. The main purpose of MONEYVAL is to ensure that its member states have effective systems against money laundering and terrorist financing and comply with relevant international standards in these areas. 

The Importance of AML Compliance in The Money Remittance System

The remittance system is improving, and this development brings with it many new players and competitors. Money remittance industry providers are reaching more regions of the world with a wide variety of fast and convenient new services. It is very important to be safe and secure in an industry with so much competition. Money laundering and terrorist financing are a security problem for the remittance sector, and the realization of these activities has very negative effects. The realization of these activities lowers the reputation of the businesses and causes them to stay behind the competitors. That's why AML compliance should be one of the top priorities for the remittance industry.

Remittance companies providers are subject to local, national, and international regulations. Whether the sender is a money transfer operator or remittance in banking, it is bound by and have to adhere to other compliance obligations such as due diligence. Remittance institutions that adhere to compliance programs provide greater operational efficiency and better customer service. Without the regulations, the safe and secure movement of money from the sender to the recipient would not be possible, and no illegal transactions could be identified. Unidentified illegal transactions, on the other hand, not only harm institutions but also damage the economy of the country. The digital solutions provided by the aml compliance program template should also be spread in the digital money transfers industry, such as Know Your Customer. With these practices, only the regulations are easily complied with, so that institutions are not subject to penalties and do not lose reputation.

Know Your Customer Requirement for Money Remittance Sectors

Know Your Customer is the application that regulators and regulatory remittance service providers are obliged to do. The aim of KYC is to ensure that systems are not used for money laundering activities by financial criminals. When remittance service providers do business with a new customer, they follow KYC procedures to find out if they are actually the people they are talking about when they establish a new business partnership. Through KYC, it is learned who the people actually are, and the transactions made in this way can also detect the criminals from the beginning and prevent the risks.

In addition to KYC, remittance systems have to perform the Customer Due Diligence (CDD) recommended by the regulators and, where necessary, Enhanced Due Diligence (EDD) procedures. Through CDD, remittance service providers make sure that their customers are providing correct information, know their customers, and take action steps according to these risks. Thus, crimes can be prevented before they are committed. Some customers may be Political Exposed Person (PEP). These people are riskier than others, and Enhanced Due Diligence procedures are required for PEPs and high-risk customers such as them.

Importance of Transaction Monitoring

Money transactions can occur very frequently in money remittance systems, and some of these transactions may involve the risks of money laundering and terrorism financing, and these transactions are almost impossible to manually control by service providers' compliance officers. For this reason, the technological response to this need of the sector is Transaction Monitoring. With Transaction Monitoring, money remittance service providers create various rules, and transactions are controlled by defining these rules automatically in every transaction they mediate.

With our advanced features, money remittance system providers can create dynamic rules and scenarios. Moreover, they can test these rules before they are implemented with the sandbox test environment. In addition, with real-time alarm management, suspicious transactions in transactions can also generate alarms and warn institutions. Thus, suspicious transactions in the transactions can be detected, and Suspicious Activity Reports (SARs) can be created and sent to the necessary authorities when necessary.

Discover our improved AML Transaction Monitoring Software

Sanction Scanner Solution for Money Remittance Sectors

With applications such as KYC, CDD, Transaction Monitoring that regulations deem necessary for the money remittance sector, institutions can cope with money laundering risks and reduce the risks. This is sometimes required in these apps. Sanction Scanner is an Anti-Money Laundering Compliance software and offers compatibility for small and medium sites in most parts of the world. Protect your business with our PEP, Sanctions, and Adverse Media screening tool. You can always use real-time data with Sanction Scanner lists that comply with all regional sanctions, CTF, and Anti-Money Laundering requirements. For more information. You can request a demo or contact us for detailed information.

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