With the development of technology, fraud in the world is increasing day by day. Financial infrastructure does not remain indifferent to this development. Increasing online transactions create many opportunities for cyber thieves. Financial institutions are using anti-money laundering solutions to prevent such theft.
So, how important is it to use these solutions? What happens to companies that don't comply?
AML Compliance Importance In 6 Reasons
- Regulatory action: Enforcement actions associated with AML have been on the rise. Since 2009, regulators have levied about $ 32 billion in AML -related fines globally.
- Threat evolution: The methods used by criminals have improved considerably with technology development and have become difficult to solve. We divide the criminals into three separate groups. The first of these is lone-wolf terrorists. They sell weapons and vehicles in low-cost transactions that are difficult to detect, and response times are critical. The second group is cyber-enabled criminals. These people use weak points of technology. They use sophisticated technology and insider information. The third and last criminal type is e-commerce criminals. The market value of e-commerce, which has grown significantly with the pandemic's impact, is approximately $ 2.4T. It's easy for criminals to appear as online merchants or payment providers.
- Reputational Risk: Financial institutions attach great importance to reputation because they are long-standing brands. Any AML crisis can seriously affect their reputation. As the market volumes are enormous, brand values are also very high. So they have a lot to lose in a potential disaster. Implementing money laundering regulations can increase brand awareness so that consumers see the business as safe. Companies that have been investigated or fined may not appear trustworthy to customers. Financial corruption charges are extremely serious, and their potential to be headline news is high. Businesses do not want to make headlines with bad news, so they want a secure reputation.
- Rising Costs: AML activities generally require strenuous manual effort. This effort makes operations inefficient and difficult to scale. In 2018, US financial services spent about $ 23.3 billion to prevent money laundering risks.
- Poor Client Experience: The compliance process is a process that requires more than one contact with the client. The speed of online shopping and communication in our age worsens the customer experience. 1 in 3 financial institutions has lost potential clients due to inefficient or slow onboarding processes.
- Financial crime will not stop anytime soon. Financial institutions are taking serious steps regarding corruption and money laundering. But despite all this, financial crimes are still not over. In the UK alone, 80 billion pounds were cleared in 2017. This means that enforcing money laundering regulations is more important than ever.
"It's no wonder AML has become a top priority for many CEOs in the financial industry. "
Anti-Money Laundering Fines
Anti-money laundering penalties and fines continued to rise in 2020—money laundering, terrorist financing, corruption, fraud, bribery, and other financial crimes negatively. With the improvement of technology, Access to financial instruments becomes easier. It has created various opportunities for criminals. When we look at the AML penalties in recent years, we can see an increase in the total penalty amount. While the AML penalties in 2018 were approximately $ 4 billion, the AML penalties in 2019 increased by two times to roughly $ 8 billion.
You can find all the fines in our "Anti-money laundering (AML) Fines in 2020" article. We are updating depending on the developments.
AML Compliance In Different Sectors
AML compliance is necessary and important not only for financial institutions but also for organizations in other sectors. These institutions are in different kinds of sectors. They are not talking about the same amount of money. And also, their client groups are so different from each other. Because of these differences, the risk levels are not the same for all organizations. Examples of these institutions are:
- Banking industry
- Money transfer
- Casinos & gaming industry
- Real estate industry
- Currency exchange
- Payment industry
- Investment industry
- Insurance industry
- Leasing industry
Regulatory compliance means following the regulations set out by regulators. It is in a state where the regulatory requirements are met to the whole extent, as required by regulatory agencies. Meeting regulatory requirements is a principal requirement for everyone who is part of an regulated industry. The regulatory agencies make these regulations across the world, whose intention of making these regulations is to ensure the quality of products made by organizations in their industry.
AML Compliance Officer
The AML compliance office's main task is to implement an AML program for the organization to comply with specific financial regulations. Responsibilities;
- Determining the risk levels of customers when opening an account Implementation of the company's anti-money laundering compliance policies
- Comply with AML regulations and laws
- Take protective measures for the company against financial crimes
- Detecting and reporting suspicious transactions
- Create internal controls
- Create monitor compliance
- Evaluate business activities to assess compliance risk
Qualification of Compliance Officers
This work usually requires a bachelor's degree in accounting, law, or another business discipline. Experience and industry certificates are also useful for this position. Some of the qualifications required for this position include accounting, communication, and IT skills;
- Education and Training: Bachelor's degree in accounting, finance, law, economics, or a related discipline.
- Compliance certifications: This could include Certified Regulatory Compliance Manager (CRCM), Certified Regulatory and Compliance Professional (CRCP), or Certified Anti-Money Laundering Specialist (CAMS)
- Prior experience: Experience in banking or financial management is often required
- Accounting: compliance officers can analyze financial records to identify inconsistencies in accounts
- Communications: Must be capable of interacting with bank staff to communicate compliance requirements
- IT: Knowledge and proficiency in managing risk management and compliance tools and systems to comply with internal policies and procedures and external regulations.
How Sanction Scanner Helps Your Company
Sanction Scanner is an AML compliance software. Sanction Scanner provides Sanction, Politically Exposed Person (PEP), Adverse Media Screening services. With our Sanctions and PEP Screening Service, businesses from all regions of the world can meet their local and global AML obligations and are therefore protected from legal penalties. In addition, Obliged institutions can perform Customer Due Diligence (CDD) and Know Your Customer (KYC) transactions in accordance with their obligations with our AML Screening and Monitoring Software to verify their customers. You can contact us to get information about our AML solutions designed with artificial intelligence.