AML Screening in the light of Compliance Regimes Around the Globe

AML compliance is inevitable for all types of businesses around the globe. The regulatory compliance face has been changing rapidly. According to a PWC (2018) survey, 2% to 5% (approximately $1-2 trillion) of global GDP is lost to money laundering. The authorities are becoming ever more vigilant in controlling and mitigating financial risk posing to the businesses and the economies of the countries as well. The regulations are not only targeting the money launderers but are also regulating their facilitators that assist hem knowingly or unknowingly in their acts. AML (Anti Money Laundering) practices have been carved for businesses around the world and all the regions require the businesses to perform due diligence on their customers in one way or the other. AML compliance is not as difficult for the organizations to follow as it may seem to be. An investment of a few thousand (dollars or pounds or yuan, etc) waives off the loss of millions in penalties. Here is where shufti enters the picture. The globally integrated system is designed to perform top-notch identity verification screening on the prospective customers of the business.

Which businesses are liable for AML compliance?

Most of the businesses are liable for AML compliance but in a broad spectrum, the businesses involved in any kind of financial services directly or indirectly are liable for AML compliance. Below is the list of the businesses that are liable to integrate a compact AML compliance solution into their organizations according to the global AML regimes:

1. Banks and all their subsidiaries
2. Brokerage houses
3. Insurance companies
4. Forex exchanges
5. Auditors
6. Casinos and online gaming sites
7. Non-banks mortgage lenders
8. Dealers in gold, diamond, and other precious metals
9. Real-estate agents
10. Money transmitters
11. Cryptocurrency facilitators
12. Fintech businesses and many others.

AML Regimes Around The Globe

China:

The Chinese economy has become one of the most strong economies, all due to their strong laws and effective enforcement of those laws. AML compliance laws in China majorly comprise the enforcement of KYC (Know Your Customer) through identity verification protocols.

• The liable businesses mentioned above are required to verify their identity proof and other documents.
• Regular identity checks must be performed in case there is any change in the beneficiaries or other identity-related protocols.
• The businesses must report any cash transaction over the minimum transaction threshold or if the customers do not provide identity proof.
• Maintaining a complete AML compliance department is necessary.

The United Kingdom:

The UK has recently taken a progressive approach towards the financial regulations post-Brexit. Currently, the MLR-2017 (Money Laundering and Terrorist Financing and Transfer of Funds (Information on the Payer) regulations 2017) is prevailing in the UK. The liable businesses are provided a complete list of AML compliance checklist which addresses mainly the following things:

• Identity verification of the customers before extending the services to them
• Maintaining and regularly updating the identity verification and AML compliance records
• Training the employees
• Take enhanced due diligence in case of PEPs (politically Exposed People)
• Performing due diligence on the online customers and overseas customers by checking them with the international sanctions lists, terrorist lists and the lists of high-risk countries
• Proper reporting and monitoring of internal AML compliance practices of the company

The United States of America:

The Bank Secrecy Act (BSA) is currently thriving in the USA and is amended several times. The regulations are quite detailed and cover almost every side of the money laundering risk of the financial institutions and other institutions involved in financial services. Below are the key AML compliance regulations in the USA under the BSA.

• Performing customer due diligence is a must for all businesses
• Banks, mutual funds and other financial institutions must go one step ahead in performing customer due diligence and perform proper customer identity verification screening on their prospective clients.
• Record keeping and maintaining a proper AML compliance program within the organization is necessary for all concerned businesses.
• Businesses are required to register for financial information sharing to be used only for identification purposes.

Canada:

In Canada, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is implementing the AML compliances and FINTRAC is responsible for enforcement and compliance of this act. The key features of the prevailing AML Screening act in Canada are as follows:

• Identity verification is necessary for all the businesses addressed in PCMLTFA
• Banks are required to perform identity verification on their customers, or the companies before opening their accounts
• The individuals must be identified through in-person or non-face-to-face programs (such as facial verification and online identity verification)
• Banks must perform complete identity verification on the beneficiaries and legal signatories of the company before opening their account.
• International electronic funds must be reported if more than CAD$10,000 (banks and Casinos are equally liable for this clause)
• In case of non-compliance, the businesses are entitled to a fine of CAD$100,000 to CAD$ 500,000.

A summary of the key features of AML regulations around the globe:
Below is a summary of the key features of the AML regulations prevailing in different regions of the world:

• The businesses are required to perform identity verification on their customers before entering into business with them
• Customers should be screened for international sanction lists, terrorist lists, high-risk countries and PEPs (Politically exposed people)
• The AML compliance practices must be performed regularly on all the customers
• A proper record must be maintained for the AML practices
• Any transaction above the “minimum cash transaction threshold” must be reported to the concerned authorities
• Proper training of employees and an integrated AML compliance program
• Fines in case of non-compliance

Shufti is the ultimate AML compliance solution:

AML compliance is made easy with the Shufti AML Screening solution. It has all the features required for a compact AML Screening solution that many businesses need today. Below are the key features of the Shufti AML compliance solution that makes it a worthy and value-generating investment for businesses:

• Identifies the people’s identities within a minute, hence reduces the friction in customer onboarding.
• It provides global coverage, identifies the IDs of the people from any region of the world
• Perform complete AML screening on your customers based on sanctions lists, PEPs, terrorist lists, and lists of high-risk companies.
• Provides the proof of identity verification and AML screening of every individual
• The Shufti database is updated regularly hence reduces the risk of wrong verification.

To conclude, the financial and fintech businesses are on the verge of losing millions due to non-compliance with AML regulations. No matter which region of the world the business is prevailing the businesses dealing in financial services is bound to follow AML Screening protocols of different frequencies. Last but not least, regulatory compliances have never betrayed a business, the investments in such compliances generate company value and provide cover against fraud and identity thieves.