By Mariana Almeida Marques
The rise in money laundering crimes all over the world forces companies to pay special attention to this issue. Luckily, not only fraudsters have become smarter, but technology has too. There is a vast array of technologies that companies can use to prevent money laundering crimes and fraudulent activities. In this article, we will explore the types of AML software available in the market, their relevance to your company and the features to look for in AML solutions.
Between 2 to 5% of the global GDP is laundered each year. That accounts for between €715 billion and 1.87 trillion each year, according to a report from the UNODC (United Nations Office on Drugs and Crime). The statistics are scary, but quite explanatory when it comes to the importance of preventing money laundering crimes.
AML software is not an optional tool anymore- it is required by law and fundamental in keeping your customers and your business safe. No matter where your company is based, you must have a strong AML policy and comply with national and international AML regulations. In order to do this effectively, it is important to choose the right AML software.
Money Laundering is a complex area to navigate. In order to prevent money laundering crimes, banks and are financial institutions often focus on these four areas:
This type of AML software is used to verify customers’ identity, as part of the Know Your Customer protocols. The Know Your Customer, or KYC, is a widely used term in the financial services industry. It reiterates the importance of ensuring that all customers are legitimate before they open an account or start a business relationship with any financial company. This software would check, for instance, customers’ address history, credit history and criminal convictions. This information enables companies to know their customers better and prevent fraudulent activities.
There is now software that monitors all transactions and picks up on suspicious details to detect fraud. Machine learning technologies can also detect fraud patterns based on previous customer transactions to make more accurate predictions and more easily spot a fraudulent transaction. This software monitors both the customer’s transaction history and their current transactions, including all deposits, withdrawals and transfers. Companies may also employ a professional to do this manually, but it is a very intricate task that requires a lot of time and attention. A transaction monitoring software is a much more efficient way to monitor transactions.
This feature is used in the United States and focuses on the amount of cash being transferred. CTR software spots transactions that are very high in value, or multiple consecutive transactions that together aggregate a big amount of money. According to the Bank Secrecy Act in the US, any transaction that is over $10,000 is immediately flagged. Currency Transaction reports are then filed and reported to the FinCEN (Financial Crimes Enforcement Network). AML software monitors the value of transactions and reports them automatically, so manual work isn’t required.
Besides the previous measures, there are also extensive regulations on money laundering that companies need to follow. AML software can be used to keep track of audits and retain all the necessary records that companies need to present to ML enforcement authorities. In the UK, the main financial entity is the FCA (Financial Conduct Authority), who oversees all ML compliance. The EU’s 6th AMLD and the US Bank Secrecy Act are regulations that also require complex reporting and auditing. AML software essentially enables companies to comply with regulations without having to invest heavily in human resources.
The most important characteristic of AML software is its effectiveness. Ultimately, integrating new AML software will be a considerably high investment, so it is important to check if it offers everything you are looking for. Think artificial intelligence and machine learning, for instance. Ensuring that you have the latest and most efficient technology will make ML prevention a much more stress-free task.
Data monitoring and analytics are also features to look out for, as they will be extremely important in ensuring maximum security for you and your customers. Make sure that the software you choose presents information in an understandable way and that it is easy to manage, so that your finance or compliance team can easily collect and analyse results should they need to. Many payment providers offer a lot of security features, including regulatory compliance, for instance. It is worth checking their features before choosing to deploy a AML software individually.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.