Anti-Money Laundering (AML) legislation is a set of laws and regulations that aim to prevent the use of financial systems for the purpose of money laundering and terrorist financing. The legal background and standards for compliance are typically established by Financial Action Task For (FATF) of the Organisation for Economic Cooperation and Development (OECD), the US Treasury, and/or by the European Union, and are then transposed into national law.
AML compliance is implemented by a range of companies, ranging from accountants and fiduciaries and lawyers to banks and forex traders to online gaming and trading firms, especially in jurisdictions like the European Union.
The objective of AML is to ensure that all customers are known to the company providing financial or non-financial services, and to reduce the chance of money laundering, tax evasion, terrorist financing and similar activities.
The steps necessary for a service provider to assure compliance with AML rules and regulations are typically based on:
Financial and professional services providers should conduct a risk assessment to identify the potential risks of money laundering, tax evasion and terrorist financing. This assessment should be done on a regular basis and should consider the nature of the business, customers, transactions and origin of funds.
Financial and services providers should implement KYC procedures to verify the identity of their customers and assess their risk. KYC procedures should include customer identification, verification, and ongoing monitoring. Verification procedures must go beyond merely collecting information: there must be an active element of actual verification.
Financial and service providers should conduct CDD on their customers, which involves gathering information about the customer’s identity, occupation, source of funds, and purpose of the transaction. This information should be verified and updated on a regular basis.
Financial and services providers should ensure that, if they are employing a politically-exposed person, enhanced customer due diligence and KYC procedures are in place. PEPs are people who hold or have recently held a prominent public position in a government, political party, military or international organization, putting them and their family circle at risk of corruption, money laundering, tax evasion or other negative events.
Financial and services providers should ensure that all transactions as well as customer accounts comply with up-to-date sanctions lists. Our WorldAML solution is continually updated across the EU, US and other sanctions blacklists.
The identity of each customer needs to be verified. This typically involves receiving at least one form of identity and proof of residence, and also cross-checking these against relevant databases. WorldAML includes some of the leading sources of identity and document verification in our database sources.
Financial and services providers should monitor their customers’ transactions to identify suspicious activities. This includes monitoring for unusual patterns of activity, high-risk transactions, and transactions that are inconsistent with the customer’s known business or financial activities.
Financial and service providers should report suspicious transactions to the appropriate authorities. This includes filing Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN) in the United States or the relevant authority in other countries.
Financial and service providers should provide training to their employees on AML policies and procedures. This training should be updated regularly and should cover the latest AML regulations and trends.
Financial providers should conduct independent testing of their AML procedures and processes to ensure that they is effective and compliant with regulatory requirements.
WorldAML provides a rapid and accurate solution for AML investigation and compliance. The WorldAML API system is built for security and efficiency and will help you meet your compliance goals quickly and effectively.
