Think Money Laundering? Think AML Compliance!
A survey shows that the amount of money laundered worldwide is ranging from $500 billion to $1 trillion. This huge amount is alarming for businesses dealing with online services. But, there is a solution. Businesses should shape their online security measures based on the AML compliance checklist. This would help them mitigate the risks of money laundering activities from happening in the system.
Financial institutions and the banking industry are major targets of money launderers to transfer their money across countries. The AML compliance checklist assures the roadmap that ensures soundness by integrating anti money laundering tools in the system. Any business failed to comply with the AML compliance will be more prone to heavy penalties and reputational damage.
AML Compliance Checklist
To fight against malevolent activities, businesses need to ensure the latest AML checklist:
Perform Customer Due Diligence
Customer Due Diligence (CDD) is a program in which a user’s data is collected and evaluated against a number of records to ensure Know Your Customer (KYC). For KYC, CDD is necessary. This helps authenticate information and data to assure the activities and verify them based on the AML Integration background checks.
This test includes data collection and verification of identities, Politically Exposed People (PEPs) and AML screening. These tests assist in detecting the malignant actors in the system and introduce soundness in digital processes.
AML Transaction Monitoring
Businesses should conduct time-to-time checks to monitor the transactions of customers. In regular assessments, verify that the customer has not performed the transactions above the specified threshold. These monitoring ways can help businesses authenticate transactions to avoid terrorist financing and money laundering activities. Any carelessness can result in harsh fines and reputational damage to the company.
Ensure Transactions’ Consistency
An organization should maintain a log file which holds the data of customer transactions. The movement of money from one place to another, the amount that is transferred and the number of transactions performed in which time spans. All this information is stored in a log file and monitored properly to find out if any loopholes or malicious transactions are spotted.
If a log file maintains the consistency of transactions, it means that all transactions are fulfilling the criteria of honest onboarding customers. Otherwise, conduct vulnerability assessment in the system and discard the dishonest users.
Verification against Updated AML records
While performing customer verification using AML software, businesses should make sure that the AML and sanctions records are updated with time. This will help businesses in authenticating customers properly without losing any new identity that is involved in money laundering activities. Also, PEPs records should be updated to discard the transactions of people who are not allowed to send their money across the countries.
Secure Records through Encryption
All the data should be encrypted with strong cryptographic functions in order to make it difficult for the evil actors in stealing and exploiting that data. This will not only ensure the customer data storage but also maintain data according to the requirements of GDPR compliance in the businesses. Customer privacy rights and data protected should also be taken into consideration.