Institutions and regulators aim to work to take effective steps in combating financial crimes. Regulators have been guiding the organizations' fight against financial crime with the regulations and recommendations they have published in the past. Regulators expect organizations to detect and prevent financial crimes by taking new measures for financial crimes that change over time with these regulations.
This process between regulators and organizations does not always work perfectly. During the audits conducted by regulators, organizations that did not comply with AML regulations were fined $ 4 billion in 2018 and $ 8 billion in 2019. Penalties imposed by regulators are published in local and global media. Therefore, these penalties cease to be just fined and cause serious damage to the organization's local and global reputations.
To protect your organization from these risks of fines and loss of reputation, you should strengthen your business's Anti-Money Laundering compliance. In this article, we have prepared for you. You can learn the steps you need to take to strengthen your business's AML compliance processes.
Know Your Customer
Businesses have to have customer information in opening customer accounts according to regulations. Know Your Customer is the process of accurately and completely identifying customer information. Generally, the most important step in the AML control process is KYC. Because if the information given incorrectly by the customer cannot be detected at this stage, other controls will lose their function, and the enterprise will be at great risk.
When the customer information is determined to be correct, the customer's risk level should be determined with the Customer Due Diligence procedures. Determining the customer risk level makes the company's AML control process more effective and faster. During the Customer Due Diligence process, the customer must be scanned in sanction and PEP lists. If a high risk is detected due to CDD procedures, Enhanced Due Diligence procedures must be applied. Thus, businesses can detect risks and threats at the customer account opening and make AML controls more effective.
We heard the concept of the risk-based approach (RBA) from the European Union in 2005 and from FATF in 2007. The risk-based approach, which was originally a recommendation for organizations, has been made compulsory by FATF since 2012. Institutions have to perform AML controls with a risk-based approach according to AML regulations. According to the risk-based approach, businesses have to control their customers according to their risk levels. Because applying the same AML controls to high-risk customers like PEPs and low-risk customers gives false results. Therefore, you should check your customers according to their risk levels to avoid wasting time with false positives. The risk-based approach strengthens your AML compliance.
Periodic Customer Monitoring & Controls
We all aim to eliminate risks and threats to our business. We must make sure that our data is correct for the control mechanism we have created in this line to work functionally. Customer information, which may change over time, may cause the customer risk level to change. For the risk-based approach not to lose its function, customer information should be updated at certain time intervals, and its accuracy should be confirmed.
Sanctions and PEP control are factors that determine the customer's risk level. No organization wants to violate the sanction decision. If your existing customer is added to the sanction lists, you have to detect this and end your business relationship with your customer. Our suggestion is to make sanctions and PEP scans to your existing customers at one or 3-month intervals. So you can detect risks and protect yourself from factors that can harm your AML compatibility.
Detecting Suspicious Transactions
The main purpose of AML checks is to detect suspicious transactions and financial crimes. For your AML controls to achieve their purpose, you must detect and prevent financial crimes. Financial Institutions have to detect suspicious account openings in customer onboarding and suspicious money transfer transactions in the transaction screening processes. Businesses can detect a suspicious situation by scanning the customer who will open an account in these processes and the buyer and sender in money transfer in sanctions and PEP lists. Besides, businesses can use services to generate alarms during the customers' unusual transactions with transaction monitoring software.
Strengthen AML Compliance With Technology
One of the prejudices we have encountered frequently from past to present is that businesses think they will harm customer experience while performing AML controls. Today, companies can perform anti-money laundering controls without delaying their customer transactions. Sanction Scanner determines the AML needs of the companies and offers appropriate solutions. Sanction Scanner enables companies to perform AML checks in more than two hundred countries in AML data in seconds. Sanction Scanner provides sanction & PEP screening service in real-time data, so you can safely perform your sanction and PEP scans. You can detect financial crimes such as money laundering, terrorist financing, corruption, and bribery and strengthen your AML compliance in all processes, from the customer onboarding process to the customer transaction process.
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