The reason to devise an AML compliance program in the first place is to impede heinous crimes like terror financing and money laundering. Regulatory authorities across the world tasked with putting a stop to financial crimes require banks to comply with KYC and AML compliance programs.
For this reason, businesses outsource the customer identity verification processes to a third-party AML/KYC solution. These solutions are designed for this very purpose and leave no stone unturned in detecting criminal advances. Running on advanced AI technology, these services are taking over the identity verification world. In this article, we will talk about the basics of an AML compliance program and why businesses are embracing IDV solutions?
Anti-Money Laundering (AML) Compliance
AML or anti-money laundering compliance is a general term that incorporates various security rules and regulations regarding money laundering. These regulations can vary from country to country. Some regions have less stringent rules on this subject like Panama while others like the US, UK, etc. have serious punitive measures relating to AML compliance.
However, it is not an option to completely skip these rules and procedures. Moreover, individuals, as well as businesses, have to go through AML checks. Therefore, any fraudulent person or the subsequent transaction made by them can be detected, flagged, and punished.
So, Who is Responsible for AML Compliance?
AML compliance is performed for various reasons including user identification; complying with global and local rules; impeding identity fraud, etc. If an end-user of a financial institution such as a bank or an insurance firm is linked with undertaking terrorist financing or money laundering activities, then the onus is on the institution to not let them into their system as legitimate users. Moreover, the consequences for the failure to see through this responsibility also fall upon the said institution.
Moreover, it does not matter how money launderers fooled your security system to conduct business transactions with your institution. If they did and the regulatory authorities found out then your institution will be in direct violation of AML compliance rules. So, the question arises, what happens in the case of non-compliance?
AML Non-Compliance Penalties: What the Worse Could Happen?
An institution guilty of AML non-compliance finds itself in deep waters. The government regulatory authorities can put various types of penalties and restrictions on the institution depending on the nature of the crime it is linked with. It can be charged with paying a fine. Not only that authorities can take away the perk of receiving credit and debit card payments from the institution. Moreover, it can be restricted from conducting business with foreign countries. Also, if an institution gets punished with any of these penalties, it will tarnish its brand image and decrease the market value.
Then, How Can Businesses Avoid the Unfortunate?
Businesses can avoid these potential penalties and their after-effects by employing anti-money laundering tools. These third-party tools verify the identities of your end-users with the assistance of artificial technology and machine learning models. Ranging from biometric verification to document authentication and address validation, these services do it all to ensure your compliance with AML laws. Moreover, it costs less and provides higher accuracy than the manual verification process. Therefore, it is a no-brainer for organizations to employ an AI-powered AML monitoring solution.
Distinguishing the Best AML Service Provider From the Rest?
Choosing the best AML service provider from a wide variety of solutions in the market can seem to be an arduous task for businesses. However, it is not as difficult as you may think. You only have to make a checklist of what you want, and what your priorities are. Whether you only want AML/KYC services or do you also want 2-factor authentication and consent verification, depends on your requirements. When you have your priorities straight, it becomes pretty easy from then onwards. However, a reliable service provider can ensure your AML compliance if it consists of the following tools and technologies.
Biometric verification technology like a facial recognition tool.
OCR/ICR technology for data entry and extraction.
Scaled artificial intelligence models for ID document authentication.
