Anti-money laundering compliance

AML Screening and Its Significance in the Global Regulations

Anti-money laundering compliance is becoming vital across the world. The need for AML compliance is increasing rapidly. A large number of global GDP (2% to 5%) is affected as a result of money laundering activities. Regulatory authorities are getting more vigilant to deter the risks of money laundering and terrorist financing that are facilitated through many sectors and industries. It is the responsibility of authorities to take in place evaluations for each region separately for the purpose of regulatory scrutiny. In addition to this, regulatory examination look into the measures taken by each state to combat the bad money flow. In case of any discrepancy, authorities charge harsh fines and penalties to relevant sectors and revoke the collaboration of international states with the financial system of the under-supervision region.

Industries that involve money flow or that could be indirectly involved in money laundering should take in place stringent actions to combat money laundering and to comply with the obligations of local regulators. Inevitable AML practices include identity verification through various aspects. Not only identity is verified but the previous record is checked to make sure that the entity was not involved in any criminal activity before or it is not in criminal record currently. AML screening solutions are performed to verify each onboarding customer against a number of sanction lists and criminal databases that are issued by global law enforcement agencies.

Businesses that are Accountable for AML Compliance

Looking at the broader spectrum, the businesses which are liable for AML compliance include those that provide or take financial services. These services could be of any kind, may involve third-parties or could be organizations and its subsidiaries that directly or indirectly take services from financial service providers. Below are some of the major businesses that are money laundering facilitators knowingly or unknowingly. These entities are liable for taking into account AML screening solutions to mitigate the embezzle money flow around the globe.

  • Traditional financial institutions (banks etc.)
  • Insurance companies
  • Auditors
  • Brokerage houses
  • Forex exchanges
  • Gold and diamond dealers
  • Online gaming platforms
  • Online gambling platforms
  • Casinos
  • Real estate sector
  • Virtual Currency providers
  • Fintech and collaborated banks
  • Digital Wallets and service providers

All these businesses around the globe and others who facilitate online transactions through their platforms and the ones who are stakeholders in its perspectives. All related industries are in dire need of AML verification for their customers to avoid aiding them. Lack of AML screening methods can lead to severe circumstances that include identity exposed, blocked business dealing permanently or temporarily (depending upon the severity of money laundering conduct), revoked funds, etc.

Stringent AML Regimes in the World

Many countries have recognized the need for AML compliance for regulatory scrutiny and also for business transparency. Among those, some major countries include the following:

China: The economy of China is one of the strongest economies in the world. They have strong law enforcement practices and norms. In China, AML compliance ensures the Know Your Customer (KYC) process to ensure the customer’s due diligence process through methods of identity verification.

The United Kingdom: Financial regulations in the UK are prevailing to cut the roots of money laundering and terrorist financing. In their financial system, it is mandatory to verify customers before providing or extending services. They are training employees and are conducting Customer Due Diligence (CDD). Also, customer screening is done against the list of exposed personalities especially, Politically Exposed Persons (PEPs), terrorist lists, money laundering and other criminal records issued by the government.

The United States: In the USA, the BSA (Bank Secrecy Act) is prevailing to combat the transfer of ill-gotten gains around the globe. Its regulation is detailed which highlights the ways through which money laundering takes place. Their AML compliance program includes a screening of customers and businesses. Identity verification of customers is done with proper AML verification.

Canada: Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is a prevailing regulation in Canada. Identity verification is necessary for businesses to conduct. Financial institutions need to verify their customers to ensure KYC at the time of account registration. Internation electronic funds should immediately be reported if they exceed Canadian $10,000.

AML regimes are enforcing AML compliance and relative laws across the world to cut the deep roots of money laundering and bad money flow around the globe. Countries should take relevant actions to contribute to the betterment of the economy and to avoid harsh regulatory fines that harm more when it comes to reputational damage.

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