Anti-Money Laundering- What Is The Term All About?
“Money Laundering is an unlawful act of showing illegally obtained money as legal, simply by turning the profit of illegal activity into a legitimate income”, and in opposed to that Anti-Money Laundering is all about the regulations and policies that are put forward to eradicate any damage and negative effects of money laundering to ensure that criminals can be identified.
AML monitoring can be defined as gatekeeping systematic activities that are carried out by the financial organizations in order to actively keep a record of suspicious financial activities.
There are some AML compliance and protocols that every company should adhere to for the monitoring of financial records in order to figure out any anomalies and to foresee any financial frauds and acts towards the prevention of it.
How AML Systems Can Halt Money Laundering?
It is a mechanism that allows for the lookup of financial transactions of customers in real-time for security checks and in case of suspicious transactions it can create alerts for AML organizations to suspect money laundering. With the advancement in AI, AML Security can easily look into the information of customers such as historical information and profile details through which it can monitor cash deposits and withdrawals. There are some AML Monitoring practices that are described below.
Proper KYC Of Individuals
The first and foremost practice is to do a proper KYC of customers if the information provided by them is correct. AML Solution providers can help to develop various applications of AI in finance to empower such tools and techniques that are able to differentiate between false positives and can detect suspicious customers if the information does not match with the provided documents.
Prioritize Risk Factors
FATF has introduced an approach that requires institutions to configure their AML monitoring response to reflect the level of risk they face. Due to this many institutions are now relying on softwares for to monitor transactions and to manage the large amount of data specifically to analyze their customers’ account activity. With the advancement in AI AML Systems are better able to organize customers, by grouping them according to the level of risk they present. By prioritizing risk factors subjected to increased monitoring measures for high-risk customers and simplified measures for lower-risk customers institutions are better able to manage their regulatory priorities that are associated with the compliance environment.
Why is AML Compliance Needed For Businesses In Crypto?
Cryptocurrency is on rise and considered to replace the paper currency in future and its exchange is quickly becoming important in financial systems, since it is new to market many system gaps have been detected and criminal committed crimes benefitting from those gaps such as bribery, money laundering and terrorist financing through cryptocurrencies. Regulatory firms are getting serious about Anti-Money Laundering Compliance, the guidance of FATF provides businesses in crypto and financial institutions to comply with KYC processes and financial services can use due diligence scanner to detect customer identification, especially for scanning high-risk customers, its importance gave rise to the AML Solutions provider that are providing AML verification through Saas and the revenue of AML software market would be about 1.77 billion U.S. dollars. It is a fact that with the development of technology, value and benefit of such software increases and not using it in the creation of AML Compliance programs may result in some penalties. Businesses can reduce the risk of trading in cryptocurrency by following certain processes.
Staying informed about Policies and Procedures
Policies, procedures, and laws on both cryptocurrency and AML security are constantly being updated and changed. The nature of these regulations is dynamic, and businesses dealing with cryptocurrencies need to be vigilant for these regulations. So that by being aware of new laws and regulations, they can take action in a short time for compliance.
Providing Proper Training To Employees
There should be educational guidance and employee workshops to include how to efficiently review cryptocurrency transactions and properly identify unlawful activities such as configuring. Cryptocurrency transactions differ from regular cash transactions as the information presented to a multi-transaction viewer is unique. Therefore, employees checking for cryptocurrency transactions will need to be trained in reading and decode available information such as “TX Hash” and “Exit Address”, how to identify illegal activities, and how to properly write and include the Suspicious Activity Report. In many regulations, the importance and necessity of these training are also considered important.
Updating Transaction Screening Tools
Transaction Screening Software will need to have the ability to process and monitor illegal cryptocurrency transactions that criminals may attempt and commit. Whether a firm wants to update its existing AML Screening tools or implement a new AML System, it is important that the tool/system be able to quickly identify and report suspicious transactions to avoid the firm’s regulatory scrutiny and eradicate the risks associated with cryptocurrency transactions.
To Conclude
Use of AML Solutions is on rise and businesses involved in crypto trading need compliance systems to suit with the requirements of FATF depending upon the dynamics and scale of operations to reduce money laundering offenses.
