Many factors are greasing the wheel of money laundering these days. AML Compliance Program is a methodology that defines the role that governs how a company monitors accounts, detects and reports financial crimes to relevant authorities. AML screening tackles with money laundering risks the company faces or can face. The role of legislation is crucial to know how the AML compliance program should work. Customer Screening for Anti-Money Laundering (AML) is the aim of completing due diligence to prevent and deter money laundering, terrorist financing, and other financial crime and fraud. Anti money laundering checks are essential for CFT (combating the financing of terrorism). It also provides a backbone check for KYC regulations.
Why is AML Required?
AML (Anti Money Laundering) practices have been used for businesses around the globe and all regions require the businesses to perform due diligence on their customers in one way or the other. Following AML compliance is not an uphill task as it seems for an organization. An investment of a few thousand dollars can demit the loss of millions in penalties that businesses will have to pay eventually. AML is required:
- To detect suspicious transactions and analyzing customer data, Anti-money laundering (AML) screening has been employed by the financial institutions.
- Anti-laundering systems filter customer data, classify it according to the level of suspicion and inspect it for errors. Such cases would include any sudden and abrupt increase in money transfer or a large withdrawal.
- AML screening is used to detect not only money laundering but also a fraud, terrorist financing, and tax evasion, etc. AML compliance has a system to report money laundering activity to relevant authorities evaluating the client’s risk profile.
AML Screening- Enhancing Businesses
In the past few years, to combat financial crimes like money laundering and terrorist funding we have seen a substantial increase in the number of legislations. Businesses today are in dire need of KYC and AML compliance to fight back all such frauds. Business owners are employing various measures against these scams but the AML compliance program is the most effective out of all. AML compliance is enhancing businesses in many. It has a lot of benefits some of which are:
- Enhanced Due Diligence:
Artificial intelligence can automate AML screening that helps automate the creation and updating of the client risk profile to match this against the classification process i.e high, medium or low risk that ensures continuous compliance throughout the client life cycle. Moreover, it assists the process of identity verification for enhanced due diligence.
- Improved Client On-Boarding:
When applied to workflow automation, AI along with AML can transform the generation of documents, reports, audit trails and alerts/notifications.
- Risk Assessment :
AML compliance can help mitigate risk as whenever a client is highlighted with a suspicious activity system can block resulting in the removal of any sort of risk. It gives a full understanding of the different tiers of risks a customer presents and how to mitigate them.