• Patrick Kelly, Americas Head of Sales at Shufti Pro


• 29.11.2022 06:15 am
#aml

Failing to adhere to AML sanctions requirements is about to become more costly for financial organizations. The Financial Industry Regulatory Authority (FINRA), which oversees compliance for U.S. financial firms, recently revised its sanctions guidelines for firms that fall short of required anti-money laundering (AML) efforts, with mid-to-large size firms now facing fines with no upper limits. Considering FINRA has recently fined BNP Paribas $15 million, and Morgan Stanley $10 million, over anti-money-laundering violations, the removal of the upper limit could see sanctions soar to eyewatering heights.

Now more than ever, it is critical for financial organizations to prioritize AML compliance efforts and maintain a robust due diligence customer onboarding and ongoing management process that detects and prevent criminal activity. Since the Covid-19 pandemic, digital banking has become a preferred method for financial transactions. However, its rise in popularity has also resulted in a spike in nefarious activity, with criminals using sophisticated techniques to steal identities with the goal of setting up false accounts for money laundering.

The most effective compliance programs today employ Know Your Customer (KYC) and AML checks that not only let firms maintain a record of their users but also identify money launderers and report them to the concerned authorities. By utilizing advanced technologies such as artificial intelligence (AI) and machine learning (ML), these compliance measures minimize fraud risks to the firms, as well as significant reputational damage and hefty fines.

In order to stay compliant and avoid hefty fines, some of the most critical KYC and AML checks for financial firms include:

1. Customer Identification: In order to curb financial crime, firms need to identify their customers using advanced solutions. But criminals often try to use stolen identities to open an account and carry out financial scams. Firms and other companies that start consistently to verify the users’ true identities -- while onboarding and thereafter on a regular basis – will reduce the risk of crime.

2. Customer Due Diligence: By using advanced technology KYC/AML solutions, firms can verify and authenticate their customers’ details, including location, occupation, type of transactions, and methods of payments. All these details help to counter criminal activities, as well as enhance auditing methods necessary to meet compliance requirements. 

3. Ongoing Monitoring: Once onboarding is complete, firms need to continually monitor their users’ activity. Known as “perpetual KYC,” this ongoing verification process regularly scans the records and transactions of users. Because regulators are constantly updating their records of criminal sanctions, firms must do the same to remain compliant.

4. Mobile KYC: The combination of mobile devices with other data sources can take KYC verifications to the next level. Facial recognition, thumb impression, and other emerging mobile technologies have helped improve KYC standards. Today, firms can authenticate their legitimate customers, and deter imposters, through the use of smartphones. 

Digital services are now a pillar of efficient and user-friendly financial operations. But criminals are constantly finding ways to exploit these systems. Today, there are KYC and AML screening solutions that have instant access to more than 1700 international sanctions lists, as well as the ability to verify customer identity in seconds with better than 99 per cent accuracy. Thus, robust KYC and AML screening services are the most viable option for financial companies to stay ahead of criminals and avoid being slapped with hefty fines.