Anti-Money Laundering (AML) Screening

Money laundering has become one of the prevalent issues since the past few decades. As per UNODC, the estimated amount of money laundered globally in one year is around $800 billion – $2 trillion or 2 to 5% of global GDP. Both businesses and governments are constantly looking for new ways to combat money launderers and financial criminals. Authorities have also developed anti-money laundering (AML) policies to boost their efforts in this fight.

What is money laundering?

Money laundering is a major financial crime. It is the illegal process of concealing the origins of money obtained through illicit means by passing it through a complex process of banking transfers or commercial transactions. The overall objective behind this vast scheme is to turn the illegal asset into clean money and return it to the launderer in an obscure and indirect way. These methods are increasing with the development of technology. 

What is anti-money laundering?

Anti-money laundering includes all the laws, regulations and policies to prevent money laundering and financial crime. There are global and local regulatory bodies established to monitor the financial crimes in their regions and create policies to prevent them from happening or catch the ones involved in such activities. Every organization has to follow AML regulations imposed on them. For that, they are required to establish compliance departments that ensure AML compliance and performing AML screening is one of the key components of AML regulations devised by the authorities.

What is AML screening?

AML screening is one of the methods used for risk assessment of a company’s existing or potential customers under AML guidelines. 

With AML screening, businesses ensure that their existing or potential customers are not present in any of the sanctions lists, PEPs, banned or wanted lists, and adverse media data. Performing screening of your customers is the main element of the AML compliance program. 

The objective of AML screening

AML screening is performed to fulfil three main objectives.

• Make risk assessment
• Avoid violating sanctions
• Protection from regulatory fines

People having their names in sanctions or any other wanted lists are high-risk customer profiles for businesses, especially those in PEPs (Politically exposed persons) list. PEP individuals have higher opportunities for financial crimes including corruption and bribery than others. Therefore, banks and financial institutions are required to perform the screening of each customer, so they can identify high-risk clients and abstain from doing business with them.

When to perform AML screening?

There are several instances where businesses are required to perform AML screening of their customers. 

• Companies have to perform AML screening during the account opening process
• As risk levels of customers change over time. Companies should regularly check the risk level of their customers with screening.
• Businesses must perform AML screening in their employment processes as well
• Companies are also required to perform AML screening of the ultimate beneficial owner of any firm they are doing business with

How AML screening is performed?

To perform AML screening of any individuals companies are required to first obtain full name and date of birth of their clients. Then with the help of any AML screening solution, like Shufti, the name of the person is screened against all sanctions and watch lists, to ensure that they are not listed in any of them.

How to make AML screening processes effective?

With the advancement in technology, the manual methods of monitoring are a waste of time and resources for companies. Technologically advanced solutions out there, such as Shufti, developed with the latest technology, make AML screening processes faster and easier for businesses. With access to global regulatory databases like watch lists, PEPs and sanctions data, these solutions increase the reliability of verification processes. Hence these tools not only provide a comprehensive risk control for your company but allow you to fulfil AML obligations effectively.

Effective AML compliance checklist

Most organizations perform AML compliance by following the maximum guidelines provided to them, but they often leave some loopholes in their process making the compliance operation less effective. Efficient AML screening is necessary especially with the changing global AML trends. By following an AML compliance checklist for effective AML measure can bring long-lasting benefits for your organization.