Staying one step ahead of financial crime is no longer an option; it has become a necessity. With North America accounting for 31.31% of the global anti-money laundering (AML) software market in 2017, which has generated around $271.8 million in revenue, the demand for more effective AML measures is apparent.
By 2023, global revenue from AML software is expected to hit $1.77 billion, which has stressed the critical role that awareness and screening play in protecting financial integrity. Businesses must prioritize these efforts to ensure compliance and protect against financial illegalities.
What is AML Screening Awareness?
AML screening is an investigation protocol utilized to examine customers’ risk profiles through the number of factors involved. These factors are evaluation points to check if a particular individual is involved in money laundering or terror funding. It also includes the scrutinization of the customer’s identity through their personal banking credentials, such as previous transaction history, which tells a lot about the particular individual.
Some identity information such as name, social security number, and address details are also checked against authorized databases. If it gets confirmed and matched, the desired individual would get a chance to get on board for getting financial services or otherwise, it would be reported to the relevant investigation teams.
AML awareness in established businesses, enterprises, and financial departments is required as they harness the utilization of screening programs that lead to combat terror funding and relevant financial illegalities.
Diverse Types of AML Screening Process
There are four significant types of AML screening processes, which are given below for understanding how different ways are utilized to check the authenticity of the individuals:
1. Sanctions Screening
It is the scrutiny process for checking the individual’s authenticity through their provided credentials against a government-issued sanctions list. These lists contain names of businesses, companies, and other fraudulent individuals who are prohibited from engaging in any partnership due to their prior involvement in terror funding, money laundering, and related drug or human trafficking activities.
2. Customer Due Diligence
Customer due diligence is the part of the compliance program that is utilized to check the authenticity of the individuals through business activities and the actual source of funds. It involves the gathering of important documents such as passports, utility bills, and registration credentials to validate the consumer’s legitimacy.
3. PEP Screening
PEP screening works on the identification of politically exposed persons and their closed fellows who hold obvious places in governments, such as parliamentarians, state members, government officials, etc. Due to their prone access to the government’s confidential data, they are marked as the most at risk of money laundering.
4. Adverse Media Screening
Adverse media screening includes the scrutinization of chronicles and media outlets for negative credentials about customers. It involves articles and digital media participation in fraudulent activities.
A financial advisor conducts an adverse media check on an existing client and discovers news articles indicating that the client is under investigation for embezzlement. The advisor is then required to notify the compliance department for a thorough review of the situation.
Why AML Awareness is Essential to Intensify Compliance Programs: 4 Major Reasons
There are different primary reasons for having a complete plan for conducting programs that promote AML awareness in financial institutes and the most established businesses directly involved in financial conductions. AML awareness brings customers on the same page and assists in combating the practice of money laundering. These four major reasons for AML awareness are given below:
- Identification of red flags: AML awareness helps in the recognition of the red flags that appear in most financial transactions. The potential red flags could be in any form, such as financial conduction at the international level with massive amounts.
- Regulatory Compliance: AML awareness leads to the meetings of regulatory compliance, which regulatory departments propose. Even everyday citizens would be conscious about following their proposed conditions.
- Favorable public reputation and customer trust: Most of the customers are confused about who they should conduct their business with. AML screening services and AML checks can make it easy for them.
- Reduced terror funding: AML compliance has intensified the regulatory system in financial institutions and the most established businesses. The whole plan of AML conduction has mitigated the significant concerns of terror funding.
Concluding Remarks
AML awareness plays a critical part in protecting businesses from financial illegalities and keeping them in line with regulations. When teams stay up-to-date on anti-money laundering practices, they are better fitted to find and handle risks that are tied to illegal activities. Regular training and sticking to compliance measures help create secure and transparent circumstances that ultimately strengthen the company’s integrity.
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