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KYC Services and AML Compliance Services for Forex Industry

Ashley Williams
June 08, 2018
4 minutes read
2672

Forex Industry stands to benefit a lot by incorporating KYC services in addition to AML Compliance solutions. A smart KYC service like Shufti Pro will enable forex businesses to better understand the identity of their customers and prevent their services from being used for fraudulent activities, scams, terror funding or money laundering activities.Identity verification is not only being adopted by financial sector with enthusiasm but regulators are also pursuing a more proactive role in making financial industry adhere to AML practices.

Forex industry is at the forefront of international transactions. This creates the need to check transactions made by Forex business and to block easy transfer of funds without ascertaining the source of those funds. Here are the ways by which Shufti Pro can assist Forex Industry to perform thorough background checks for AML Compliance and verify the identity of the persons who are making transactions through a forex company.

KYC Services for Forex Industry

Shufti Pro provides customised KYC Services for forex industry backed by its unique AI powered identity verification services. Forex businesses can perform each transaction at a lightning fast speed by using Digital KYC from Shufti Pro that has an industry best 30-60 seconds processing time. Shufti Pro integrates flawlessly with all the pre-existing systems of Forex industries with the help of API and SDK integration. Size of a franchise network of our forex client will not be an issue as Shufti Pro can handle large number of verifications at the same time, once integrated into our customer’s transaction platform.

KYC Services from Shufti Pro will enable our forex clients to perform:

ID Verification
Identity Verification
Documents Verification

Shufti Pro also provides Video Verification in addition to Still Verification to make the digital identity verification easier for our Forex clients. Records of customer data will be easily accessible for future reference. This data can be counter-checked in case transactions are carried out on behalf of another person.

AML Compliance for Forex Industry

Shufti Pro is the right choice for forex businesses who want to bring on board a next-generation AML/CFT Compliance system. More than once, forex companies have been found an unwilling facilitator of international funds transfer that led to money laundering or terror funding.

End-to-end verification services of Shufti Pro will help forex companies to safeguard themselves from becoming a part of such practices. Each transaction and customer can not only be verified but the verified identity can also be checked against a huge data bank maintained by Shufti Pro for money laundering activities. There are 1000 Watch Lists and Sanction Lists that make up the huge databank of Shufti Pro that is used for background checks. In addition to these lists, credentials from 3000 databases also populate the databank of Shufti Pro. All these lists and databases are maintained by reputable international and national organization that identify personnel involved in financial crimes all over the globe. Shufti Pro’s Data bank includes information from UN, Interpol, OFAC, and HMT.

Apart from background checks against Data bank for financial crime risk, Shufti Pro also maintains a long list of Politically Exposed Persons to further strengthen AML Compliance for our forex based customers. Shufti Pro offers 3 kind of AML compliance services to its Forex customers:

One Time Checks

Perform a background check just once, before making a transaction or registering a customer

Bulk List Checks

Get a large list of suspicious clients/ overall customer portfolio verified at once

Ongoing Monitoring

Continuous monitoring and immediate alert in case a client gets red flagged

Shufti Pro understand the value of services that a Forex company has to offer. Comprehensive identity verification services from Shufti Pro are also perfect for forex industry because we offer KYC services for every country of the world. Additionally, Shufti Pro also has a worldwide language coverage. It means we can verify the identity of every person of the world living in any country of the world and having his/her documents in any language of the world. We can even block countries in which you don’t intend to provide your forex services. Our country restriction feature is much more full proof as compared to industry prevalent geo-tracking feature.

Trust Shufti Pro and we will make sure that you will never have to regret making that decision.

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Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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Corporate Transparency Act - The Road to Better AML Compliance
KYC Services for Forex Industry
AML Compliance for Forex Industry
According to the latest reports, the United States ranked number 1 for not complying with the anti-money laundering regulations. Around 12 penalties were imposed on the US banks and Goldman Sachs had the highest fine of €3.30 billion (USD 3.90 billion). Given the rise in money laundering activities in the US, the Corporate Transparency Act was structured. Recently, the Senate has passed the act. Financial institutions of the United States have until January, 2022 to report to FinCEN according to the updated laws. Once the Act is in action, the US companies have to report their Ultimate Beneficial Owners (UBOs) to the Financial Crimes Enforcement Network (FinCEN). In 2022, new Limited Liability Corporations (LLCs) have to report their UBOs and any changes in the beneficial owners will be reported as well. However, any corporations formed before the effective date will have two years for reporting to FinCEN. Let’s dive deeper into the corporate transparency act and how can companies efficiently comply with it.

Read more: Record-Breaking Fines on Banks for KYC/AML Non-Compliance

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) directs the FinCEN to maintain a national record of all the ultimate beneficial owners (UBOs) of companies within the US. Any changes in the UBOs must be reported too. The Act focuses on eliminating the shell companies that facilitate money laundering and terrorist financing.
Requirements for Corporate Transparency Act

As per this Act, the term beneficial owner refers to anyone who owns 25% or more equity share, has some substantial control over the company, or receives benefits from the company’s assets. Therefore, verifying these stakeholders is essential for the company.

FATF’s recommendations for best practices on beneficial ownership for legal persons have been best categorised in the Corporate Transparency Act of 2019. According to this Act, companies have to provide the following information about the ultimate beneficial owners to FinCEN.

Complete legal name of the owner

Owner’s date of birth

Current residential or business address

Unique identification number as on the passport, driving license, or the ID card

The company has to submit an annual report of the current UBOs and any changes in the previous year’s owners to FinCEN.
Current Scenario of the CTA

According to the current situation, some sections of the Act need more clarification and specifications to address minor details. The Corporate Transparency Act has not clearly defined beneficial owners as direct or indirect substantial controlling authorities. Any failings in the Act can lead to more challenges for businesses and violations of the Act will lead to heftier penalties.

Anyone who assists in the creation of legal entities like attorneys will be monitored. Previous iterations in the Corporate Transparency Act categorised formation agents as financial entities and made them subject to the AML and reporting obligations of the Bank Secrecy Act. In the current version of the Act, references to formation agents have been removed. However, the rulemaking authority given to the Department of Treasury can expand requirements for business. This will ultimately broaden the scope of potential criminal liability.

Next Steps for the Financial Institutions

Until long-term actions have been decided, here are some short-term actions that must be considered by form corporation and entities:

Assess if your company has reported the beneficial ownership requirements according to the Corporate Transparency Act or not.

Create a checklist of the reporting requirements

Under the Act, every beneficial owner must be identified

Endorse all identity verification documents of every individual that is considered as a beneficial owner

Plan renewal in case of expiration of the documents of UBOs

There must be a risk ranking system that account for variables like country of origin, service provided, and categorize the levels of risk within relationships

A “trust-but-verify” approach must be leveraged if any of the information raises red flags suggested by FATF

There must be a sound process for keeping the reporting mandates in touch. This includes the people responsible for collecting information of beneficial owners and filing with FinCEN

Annual monitoring for tracking compliance is important

Sufficient resources must be allocated for better compliance with the new filing obligation

Penalties for Non-Compliance with Corporate Transparency Act

The CTA has announced hefty penalties for any company that does not comply with the regulations. According to the Act, USD 10,000 must be paid as civil penalties. Furthermore, criminal fines and up to three years of imprisonment have also been announced. In order to comply with these regulations and avoid any fines or penalties, it is better that the US-based companies employ Anti-Money Laundering (AML) screening.

With the help of AML screening, organisations verify all the stakeholders and any high-risk customers can be identified before they become the company’s problem. This screening cross-checks the identity of the person with numerous sanction lists. Lastly, enhanced due diligence checks are also an option that can help your company comply with the regulations.

Summing It Up

The rise in criminal activities has led to amendments in Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. The new laws are designed to make customer due diligence and identity verification measures as rigid as possible. Criminals should not be allowed to surpass these checks at any cost, and better laws can help companies in this regard. The Corporate Transparency Act (CTA) will be active in January 2022 and businesses have until then to report FinCEN about their Ultimate Beneficial Owners. USD 10,000 civil penalties, criminal penalties, and up to three years of imprisonment is the punishment if any organisation fails to comply with CTA.

The purpose of Corporate Transparency Act is to combat money laundering and terrorist financing. With the help of Anti-Money Laundering screening, companies can ensure enhanced due diligence of all the customers. It will not only help onboard the right customers, but it will also assist your company in better compliance with CTA.
Multi-layered identity verification and background screening of beneficial owners is now inevitable for the US finance sector. All risky entities will be highlighted and reported timely, reducing the risk of money laundering and terrorist financing in the USA.

Want to know more about automated AML screening? Talk to our experts.
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KYC Services and AML Compliance Services for Forex Industry

KYC Services for Forex Industry