Enhanced AML Security Checks And Solutions

AML security

AML security is the root of all evils. That’s right, the desire for money encourages criminals to launder dirty money and then use it for illegitimate purposes. According to an estimate by Deloitte, the total amount of money laundered equals 2-5 percent of the global GDP, which makes almost 800 billion USD to a maximum of 2 trillion USD. Black money is used by criminal identities to perform drug trafficking, financing terrorist organizations, and other criminal pursuits. 

Therefore, money laundering is seen as a serious offense all around the globe with hefty penalties against the offender. AML security helps banks comply with AML compliance and keep themselves protected from potential cybercrime and money laundering.   

Money Laundering Through Banks

Banking entities involve a good deal of monetary operations which makes them a sweet spot for conducting money laundering activities. Bad actors use different mechanisms to steal the money of legitimate bank customers to pursue their illicit motives. Money laundering is performed in three steps; Placing, Layering, and Integration. 

  • Placement

The initial stage comprises acquiring money through different cybercrime like data breaches, identity theft, phishing email fraud, and ransomware attacks, etc. Customers of banking or financial entities often receive fake emails from dubious scammers attempting to take over their bank account. Once the amount is received in the fraudster’s bank account it enters the legal financial system.

  • Layering

The next step involves cleaning up the illegitimate trail of money. Since the ill-gotten money received in the criminal’s wallet is illegitimate and full of suspicion, they have to clean it in order to use it for their purposes. By distributing large deposits of money in different transactions through various channels and platforms, they divide the money to avoid the attention of regulatory authorities.    

  • Integration

In this stage, the criminal uses his sources to get the money back. The sources seem to be reputable and clean, which may not be the case always since most of them are run by money mules. The fraudster can now use this money to conduct activities like terrorist financing and buying stocks in bulk.   

What is Anti Money Laundering Compliance

Anti Money Laundering (AML) compliance is a set of guidelines which are chartered by the European Union (EU) to fight against illicit money laundering. Financial organizations and online businesses are obligated by law to follow and meet these standards to ensure they are KYC/AML compliant. It not only provides a safe channel to perform business activities but also ensures the customer’s identity is protected from theft. AML security compliance is the perfect set of regulations to combat business fraud and taking down shady characters.  

The AMLD5 issued in 2020 also focuses on regulating virtual currencies like Bitcoin to stop illegal crypto mining. In case of non-compliance with AML security laws, companies and organizations have to face serious consequences in terms of both market reputation and hefty penalties. 

AML Program and How is it Effective

To ensure proper AML security standards, online businesses and financial businesses need to invest in AML programs. These help to achieve the all-important trust of customers as well as international certifications which add to the credibility of the company. An AML banking program usually consists of internal and external audits, employee training, and a certain number of checks which helps banking entities mitigate money laundering crime. 

In a Nutshell…

To wrap it up, AML security compliance helps financial organizations and banks mitigate money laundering activities through their platforms. AML practices also help trace unusual patterns in customer behavior, mark it as suspicious, and report to financial regulators to take down cybercrime. hence, financial infrastructures are integrating themselves with accurate and efficient AML checks to enhance customer repository and to combat chargebacks. 

Program on Anti Money Laundering:

Businesses need a powerful anti-money laundering policy to deter money laundering and terror funding from their networks. Global watchdogs such as FATF, FinCEN, and the EU have released guidelines for combating money laundering that is mandatory for any organization. It is possible to find or blacklist a company that does not comply with these guidelines.
Recommendations of the AML/CFT Task Force and Financial Supervision Authority on Financial Action:

  • Screening and recognition of market capital
  • Every financial transaction’s supervision
  • Strong networks for finance
  • Implementation Know your due diligence from suppliers and customers
    Solid business/corporate laws for a territory.
SEE ALSO:   Cyber Security: How to Protect Your Business
How do AML systems help curb the laundering of money?

Banks are active in one way or the other in many money-laundering operations. Governments leave it up to these institutions to comply with the policies and procedures of Anti-Money Laundering (AML) and Know Your Customer (KYC). At the hands of these banks, there are plenty of anti-money laundering options. Using successful anti-money laundering tools will keep these banks consistent with AML and KYC policies in each of the phases of money laundering, along with deterring illegal activity. These systems, in addition, secure banks in the following ways:

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