Money laundering is not a strange term, especially for those who love watching crime drama series. However, have you ever heard of anti-money laundering (AML)? Its initiatives date back to 1989 when groups and countries worldwide formed FATF (Financial Action Task Force.) The FATF was aimed at creating and implementing standards to prevent money laundering.

After the 9/11 terrorist attacks, FATF began combating terrorist financing activities. Currently, crypto currency is on their radar due to the anonymity it affords its users. Businesses are now more aware of the need for anti-money laundering controls hence have adopted AML compliance programs. Here's everything you need to know regarding AML and how you can comply. For more information on AML compliance, visit the website.

Anti-Money Laundering Process

Money laundering entails criminals using legitimate businesses to launder money obtained illegally. They may also invest or deposit the illegally obtained money in small amounts to avoid raising suspicion. Financial institutions must, therefore, monitor customer deposits and report any suspicious activities. Usually, cash transactions of over $10,000 have to be investigated to obtain their source. Banks use the Know Your Customer (KYC) strategy as part of AML compliance because it helps them verify customer identities.

Achieving AML Compliance

For money laundering to be detected, a compliance program has to be implemented. A business therefore requires:

Due Diligence

A business should detect risky customers, and this is only possible if it carries out rigorous checks on their profiles.

Compliance Officer

While AML compliance is the duty of every person in the organization, having a person with the knowledge and skills specific to that task makes work easier.

Reporting System

It would beat logic to identify a criminal and not report him to the relevant authorities because your system is ill-equipped. Your system should be enabled to report suspicious customers immediately.

Combating Money Laundering

Training Employees

AML compliance can only be facilitated by a trained person who knows what to look out for to flag suspicious activity.

Holding Period in Financial institution

Deposits in banks must be held in the account for at least five trading days to assist in risk management. However, criminals can still try to be clever and structure deposits that do not meet threshold reporting requirements.

Advanced Technology

With artificial intelligence, financial institutions can now detect patterns of transactions; any anomalies are reported to compliance officers. Big data further enables organizations to map out strings of transactions and trace origins of illegal activities.

Legal Measures

Money laundering is a felony whose punishment is dependent on the value of property or money involved. Transactions between $300 and $20,000 attract a 5-year sentence. The maximum one can get is a 20-year sentence, which should deter anyone from participating in such illegal activities.

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