Money laundering has been the most recurring financial crime in recent years. The criminals have incorporated advanced methods to transfer money illegally from one place to another, increasing the risk of malicious financial activities. A report states that in 2020, a risk index score associated with money laundering was observed to be 6.78. Money laundering and terrorism financing raise concerns for companies, which is why they need fraud screening solutions that can detect and overcome these issues. Anti-Money Laundering (AML) screening is a robust solution to assess the risk profiles of their customers by following the AML guidelines.
AML Solutions – An Effective Fraud Mitigation Regulation
Anti-money laundering screening is a fraud detection service that screens customers against several watchlists to analyze their risk profiles through advanced identity verification services. AML screening allows companies to monitor the customer’s financial activities relating to transactions, risk profile assessment, and any malicious activity. The customers are screened during the onboarding process to eliminate the occurrence of illicit entities in the company’s business operations. Companies require customers to submit their identity documents, which include their names, proof of income, address proof, social security number, and tax return files.
These are the basic information that every company collects to validate the customers. However, financial institutions must conduct additional screening by assessing the customer’s risk profiles and comparing the provided identity documents with official watchlists and directories, which is done through the customer due diligence process. If customers are examined as being involved in risky activities, they are prevented from opening their financial bank account.
AML Procedures – An Ultimate Anti-Money Laundering Screening Mechanism
AML screening can be done by analyzing the customer’s identity documents against several screening lists, such as the PEP list, sanction screening, crime watchlist, and adverse media checks. The customer’s screening against these lists is essentially the most significant step to ensure compliance with the AML regulations.
- Politically Exposed Person (PEP) lists: The PEP lists include high-profile customers who belong to a particular political group or government entity. These entities are sensitive to money laundering attacks as they are likely to be affected because of their significance in the public view. Anyone included in such lists must be thoroughly screened before registering them as legitimate entities.
- Sanction Screening: The sanction lists classify the business entities and individuals affected by government sanctions at any point in their lives. They also include those individuals who have resulted in government penalties. Sometimes, the relatives of these risky entities are included in this list as well. This list detects the customer’s identification numbers, aliases, and nationalities.
- Crime Watchlist Scanning: Watchlist scanning detects individuals against directories containing information about known criminals. This allows companies to detect whether the potential customers are involved in criminal activities. Watchlist screening protects business operations against the presence of illicit and unauthorized entities that are significantly risky.
- Adverse Media Screening: This screening checks the individual’s identity against news publications and media sites to identify whether they were arrested or charged with any criminal activity. It highlights the customer’s financial history and prevents companies from onboarding risky identities.
AML Verification – A Comprehensive Risk Assessment Technique for Fraud Screening
AML verification is an extensive risk assessment service that compares the customer’s identities against watchlists to prevent high-risk entities from accessing financial services. Businesses want to stay protected from these entities, so they conduct enhanced due diligence that screens the customers against these watchlists using advanced identity verification services. Its ultimate purpose is to mitigate the violations of sanctions to protect the company against regulatory penalties.
AML Checklist – An Effective Identity Protection Procedure
An effective AML checklist involves assigning a compliance examiner to conduct the risk assessment program and incorporate secure written policies highlighting the main objectives of money laundering screening. The company must introduce a training program for employees to deal with high-risk customers. The risk analysis is later reviewed by a third party to authenticate the results and use automated AML screening for a seamless due diligence process.
AML Compliance – Significance for Malicious Attacks Prevention
The AML screening is essentially the most significant component of AML regulatory compliance. Its ultimate aim is to ensure that the underlying transactions comply with the official government regulations and avoid dealing with the consequences of non-compliance repercussions. The use of digital identity verification techniques reduces the number of false positive interactions and allows a smooth customer onboarding experience.
Summing It Up
AML screening is the most influential risk screening service that obligates the government’s AML regulations. It prevents financial institutions from dealing with illicit entities that are involved in money laundering and identity theft attacks. AML compliance uses customer due diligence programs to detect the customers against official government watchlists to detect high-profile individuals. It prevents all the malicious attacks from affecting the company’s financial operations, providing a secure customer onboarding experience. They authenticate their findings by getting reviews from official third parties to validate the customer’s identities.