Mon. Dec 6th, 2021

How Do AML Solutions Prevent Financial Crimes Seamlessly?

How Do AML Solutions Prevent Financial Crimes Seamlessly?
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A plethora of industries are benefiting from AI-powered AML solutions. The screening service enables businesses to protect the monetary funds and sensitive information of their customers along with the integrity of the corporate or financial entity from scammers and cybercriminals. 

At the time of onboarding, during the KYC/KYB process, AML solutions are practiced to get an overview of past activities and alliances of the prospect. AML verification is an ongoing process. Post getting the customer onboard, the system constantly monitors the deviations in the client’s behavior and identifies the intensity of risk if any, with accuracy for firms in no time.

Due to non-compliance with AML standards and regulations, Interactive Brokers LLC and Industrial Bank of Korea had to pay a penalty of  $23.7 million and $86 million respectively.

 

How Verification is Performed in the AML Screening?

The programming interface of AI-driven AML solutions showcases a number of checkboxes, requiring basic information such as first name, middle name, last name, and DOB of the individual, beneficiary owner, or legal representative of an organization. It delivers a detailed report about the individual or company with the level of risk in the association.

Prospect Screening of AML Systems

The automated AML solutions with access to classified regulatory directories can track records of illegitimacy on any individual or corporation in moments. The provided information by the customer is matched against the data hardcoded in updated archives or watchlists of federal and intelligence agencies like the Foreign Affairs Department, Defense Ministry, State Financial Monitoring System, and so on with zero error. 

In the case of corporate verification, along with basic personal information, AML solutions authenticate,  the official registration number, legal structure of the corporation, perform extensive background checks on the UBO’s and major stakeholders of the firm, In the end, a suspicious activity report is created with final results.

 

Importance of AML Solutions for Businesses

Every single soul out there with a smartphone is a potential customer for different businesses and in order to supplement the increasing volume of the target market, businesses seek to form partnerships and indulge in joint ventures as well. For the accomplishment of strategic goals, firms create associations with third parties, for legitimate and risk-free collaboration with a company, AML solutions validate the credentials and generate a track record of business activities of prospect firms along with end customers.

The fully automated process takes place to eliminate errors and according to the generated results of AML solutions of the customer, the screening system of corporations, banks, and other financial institutions creates different groups according to the level of risk involved in the client profile. 

 

What makes a Customer/Prospect Riskier in AML Screening?

There are multiple factors that contribute to the risk rating other than a valid record of illegal activities or financing terrorist attacks, such as:

Prohibited Country/Territory

The original location of the individual or UBO of a company is a blacklisted region or it’s a country/territory with a high ratio of fraud cases and financial crimes reported.

Politically Exposed Person

The person is mentioned in a PEP list, which means due to the influence of the individual, chances to commit money laundering by him are more likely and convenient. The profile would be flagged instantly in the preliminary authentication

Transaction Monitoring

The process of transaction monitoring in AML solutions works by constantly reviewing customer’s data from what was expected from the time of initial versus what is the actual number currently? The expected volume and frequency of transactions of the customer get hard-coded into the system to observe customer transactional behavior.

The AML solutions start to monitor the saved data against the transaction the customer starts to make and when the threshold limit is breached, then the transaction is flagged as a red flag.

 

Conclusion

AML solutions are mandatory for corporations and the financial services industry to develop global relations and ensure the onboarding of legitimate customers. The screening service enables the organizations to ensure that the prospect has no record of illegal activities by matching their information against the data stockpiled in confidential datasets. It is unarguable that the AML solutions have a global impact on the economy and security; assuring risk-free customer onboarding and an essential part of KYC verification. From getting client’s data compromised and image of the entity being sabotaged, AI-powered AML solutions, trace suspicious leads on customers in seconds.

 

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