Anti money laundering best practices in banking and finance

1. Anti-Money Laundering (AML) in Banking and Finance: Best Practices Posted on November 7, 2022 by Jay Raol Contents: Banks and Money Laundering Steps to Achieve AML in Financial Services Banking AML Compliance and SAR, STR ?lings How to Ensure Optimal AML in Finance Procedures

2. Anti-Money Laundering, AML in banking and ?nance, is a legal obligation that the industry must oblige to ascertain they do not knowingly or unknowingly support money laundering and terrorism ?nancing activities. Banking is a major ?nancial service, and AML in banking is almost synonymous with AML in ?nance. Banks are obligated to perform all anti-money laundering checks on their customers, as the launderers most exploit the banks for placement, layering, and integration – the three stages of converting the illicitly gained money into ?nancially acceptable form. Unlike earlier methods of form ?lling for ?ling suspicious transaction reports (STRs) for cash deposits beyond the threshold levels, modern anti-money laundering or AML in ?nance follows advanced Arti?cial Intelligence (AI) and Machine Learning (ML) technologies. Simultaneously, many banks are adopting Blockchain technologies to ful?ll their AML-KYC compliance needs. Banks and Money Laundering With increasing volumes of online payments and virtual banking operations in practice, new forms of money laundering in banking have become all the more sophisticated and not as easy to capture. For instance, a rise in the number of card fraud, friendly fraud in payments, and a new form of e-commerce money laundering, called transaction laundering, all have come into play. It makes the current situation challenging for banks and money laundering detecting authorities, adding complexity to the daunting task of bringing perpetrators of ?nancial crimes to justice. Steps to Achieve AML in Financial Services To remain AML-CFT compliant, anti-money laundering or AML in banking has certain procedures. The ?rst always remains to Know Your Customer (KYC) or Know Your Business (KYB) for identity veri?cation of the customer and to ensure the person is the person they claim to be. However, AML in ?nancial services is also about continuous due diligence and ongoing monitoring. Frequent ID document checks and upgrades also form an important part of the AML measures and are often linked to enhanced due diligence. The next in the AML in ?nancial service fraud mitigation measure is client screening against individual, organizational or national sanctions. Client screening against politically exposed persons (PEPs) and adverse media lists is next on the list, and also equally important to check if the customer holds any in?uential position or has gained negative publicity in the past. Banking AML compliance procedures have one ?nal important measure, i.e., transaction monitoring. Positive KYC identity veri?cation and screening checks don’t mean the customer is risk-free. Hence, AML in banking calls for continuous monitoring of customer behaviors and activities. To abide by this important AML in banking obligation, the ?nancial institution must use an effective AI-ML base transaction monitoring solution.

3. Banking AML Compliance and SAR, STR ?lings Financial Action Task Force (FATF), an international AML-CFT policy-making body for ?nancial and regulated institutions, ascertains the prominent role of the Financial Intelligence Unit (FIU) in combatting money laundering and terrorism ?nancing nuisances. Each FATF member nation has one national FATF FIU body setup. The banking risk team is subject to ?ling all Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) to the state FIU within the stipulated time for prompt investigations. How to Ensure Optimal AML in Finance Procedures Employee training and effective in-house risk mitigation technology are the two main factors that de?ne the quality of AML in banking e?ciently. Practical AML staff training, with regular tests and revisions, determines the pro?ciency levels of the staff. Alongside this, the banking AML compliance engine must be such that it can be easily integrated into the existing operating system without creating much friction. State-of-the-art automation tools for anti-money laundering in banking can save the organization from ?nancial penalties and help build a strong reputation that helps in customer retention and new client acquisitions. If you are a ?nancial service looking for AML-CFT implementation in your organization, IDMERIT offers hassle-free integration with single API AML automation. You may further read pertinent information on our website or book a free consultation and get in touch with our AML ?nancial crime manager for your business.