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The periphery of anti-money laundering (AML) efforts continues to expand as more countries are tightening up their defenses, leaving criminals little room to conduct their activities.
In the U.S., we have the Anti-Money Laundering Act of 2020, the Patriot Act, and the Bank Secrecy Act, which advocate collaboration and the use of advanced technology to fight financial crimes and the financing of terrorism. Previously, compliance was primarily required for financial institutions and banks. Now, this requirement has been extended to businesses, in order to protect themselves and their customers.
Why These Laws Matter
These laws serve two purposes: to counter criminal activity and to identify dangerous users. Anti-money laundering schemes have always burdened businesses. Organizations that lacked thorough vigilance and effective tools left the door open for cyber criminals to attack. Identity thieves were also a menace to financial institutions as they would take over accounts, leak private information, and claim funds.
With more collaboration underway by both banks and businesses, such criminal activity will fail to have a stronghold in the near future.
In a recent article, Tamas Kadar, CEO of SEON, outlines the seven core principles for AML Compliance:
- Dynamic customer verification – Use customer due diligence (CDD) and KYC technology.
- Risk-based screening and AML – Practice extra diligence when dealing with politically exposed persons (PEP), Specially Designated Nationals (SDN), and money service businesses (MSB).
- Transaction Monitoring – Keep detailed records and file suspicious activity reports (SAR)
- Ongoing due diligence – Have automated and manual processes in place to supervise customers, spot suspicious activity, and report cases immediately.
- AML training – Go over compliance requirements for your organization as well as responsibilities of staff members.
- Efficient reporting – Streamline your AML reporting sytem
- In-depth testing of AML and fraud systems – Have an ethical hacker with no knowledge of the system try to break into your defenses.
Last year, we witnessed more banks arming themselves with artificial intelligence and machine learning technology to combat growing anti-money laundering schemes. With tightening regulations and a history of fighting the battle alone, banks are seeing the need to collaborate and join forces to put a dent on this ongoing problem.
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