AML Compliance

The regulations imposed on banks and financial institutes to combat money laundering have grown stricter over the years, with even more stringent fines exacted for noncompliance.

In 2018, the banking sector in Europe had to pay over 1.7 billion dollars in fines for not implementing a viable anti-money laundering or AML solution.

On the other hand, the financial sector has always viewed compliance procedures costly and inefficient. This develops the need for more progressive tech solutions to implement faster and cost-effective procedures for AML compliance.

The financial services sector now needs to reevaluate their procedures to adhere to compliance regulations in a better way. This may help reduce the friction between them and the regulatory authorities across the world.

Since organizations like FATF, FINMA, and FinCEN take a tougher stance on money laundering and corruption, it is even more imperative for businesses to adopt better strategies for compliance.

Financial Crimes are a Global Concern

Ever since the Panama Papers leak, the world has seen hordes of corruption and money laundering scandals. From political personalities to media players, no one was left out of such public embarrassments.

money laundering

Consequently, governments all over the world have been developing and/or executing stringent laws for money laundering. The brunt of this scrutiny has been borne by banks and financial institutes since they are the key players used to embezzle or launder money.

To combat such activities, the industry seriously needs to think about efficient and productive solutions that can help detect any kind of illicit activity.

Why are Compliance Solutions Important?

Recently, the European Union has passed regulations that clearly establish the Ultimate Beneficial Owners (UBOs) for a property of money. This directive decreases the chances of criminals to hide behind shell corporations.

Moreover, globally, the financial services sector saw a total of 26 billion dollars in fines due to a lack of compliance with anti-money laundering policies.

 

A lot of banks are not in the habit of updating or spending more on their existing compliance procedures. But at the same time, they have to bear sanctions or fines for not doing so.

Therefore, it wouldn’t be wrong to state that not spending on an effective AML compliance solution may lead to even heavier losses for an organization than their adamancy to the notion that they cost more.

Leveraging Technology for Compliance Solutions

Technology can provide the perfect middle ground for implementing compliance solutions. Understandably, manual compliance procedures can be a headache to implement and oversee.

They pose a higher chance of error and can be expensive. Human verifications of individual clients can take hours, if not days to confirm an individual’s status.

A viable alternative to manual compliance can be an AI-based AML solution, now available, that can authenticate a client’s status within seconds.

It is a simple process that takes less than a minute to perform the verification.

This process performs AML checks along with identity verifications, that enable a bank or financial institute to check for any threats their clients may pose.

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