In the Compliance Program, customer verification is mandatory. As fraudsters are always looking for opportunities to exploit weaknesses in the system and for this serious security measures must be taken into consideration.
Money launderers are targeting the online retail industry, online banking portals, and such online platforms. Manually it is not that hard to verify the identity but it is challenging when it comes to online verification.
What is the rule of thumb for valuing a business in 2020?
For any financial institution or global business, it is necessary to perform KYC of their customers. 64% of countries have recorded high risks of money laundering and online payment scams. Any identity that is entering into the system should be identified and verified based on the needs of the institution.
This would help in keeping a track of the individuals who are part of the system. Also, for this, individuals must be checked against the Anti-Money Laundering (AML) records to prevent illegal cash flow inside the organization.
Why AML Compliance is Important For Businesses?
Anti Money Laundering compliance tightens money laundering, it inherits most of its qualities from blockchain in functionality. If blockchain is a machine learning with AI solutions, that can help to learn strings of data to detect if money laundering is occurring somewhere, not like old blockchains, AI enables to learn even the large amount of data, that makes it able to keep up with the pace and efficiency of transactions made by any businesses in this digital world.
Another reason for implementing such a standardized system is, the financial institutions and their regulations that vary from and within the transaction monitoring, to payment making each and every procedure varies from institution to institution.
Even the states with its different legislative measures vary while dealing with financial matters. But the rising need for standardization makes it necessary to maintain an automated monitoring system. That is able to regulate the AML process.
Why does Business Need AML Checks?
AML and KYC checks are done thoroughly to help financial services and other regulated firms to guard against white-collar crimes including money laundering, corruption, and fraud. These are all issues that can affect any business and can have serious results, for both the business in question and wider society.
What Are The Laws Concerning AML?
The Know Your Customer(KYC) principle refers to the verification of personal and business data of new customer of a credit institution for the prevention of money laundering and terrorist financing, based on The Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017. These regulations were implemented from June 2017 replacing the old Money Laundering Regulation of 2007 that was previously in effect.
Following are the 5 ways through which AML compliance is incorporated in the compliance program:
Auditing of Identities
In a recent report this morning by property eye industry, Agents warned that many businesses are failing to comply with AML requirements for the audit.
While keeping track of the customers and their activities, a file is maintained which holds all the information of customers, data flow, cash flow and orders (in case of online stores). Manageable audit files help in better interpretation and analysis of data. Also, this can avoid the risks of money laundering and would be responsible for security secondarily.
Businesses should verify the identities against global electronic AML records. These records act as an independent database. It help verify that a particular identity has not been part of any money laundering activity. Anti-money laundering checks are implemented in the system to avoid bad actors in the system.
Monitoring of Identities
The individuals that are becoming part of the system even if they are purchasing goods online, must be verified. The system should be monitored continuously to avoid money laundering activities. The identification and verification must meet the goals of a clean and healthy system.