Shufti Pro integrates AML Compliance into its end-to-end Verification Services

Shufti Pro integrates AML Compliance into its end-to-end Verification Services

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Shufti Pro has now launched AML compliance in its set of identity verification services to provide comprehensive risk assessment and due diligence to its valued clientele. In the UK more than 200,000 cases of money laundering are reported by the authorities annually. So, Shufti Pro has extended AML compliance to better serve its clients, especially those belonging to the Banking and Finance sector. Shufti Pro is already an emerging force in Digital KYC services with nearly 40 customers already acquired before the conclusion of its 3rd quarter since inception. With the launch of the AML product, Shufti Pro has achieved the status of a comprehensive solution to perform identity verification. AML compliance from Shufti Pro will allow banks to provide services like remote account opening, movement of funds, and offshore banking with enhanced Risk assessment.

Methods of Money Laundering

As online crimes are evolving, financial criminals are acquiring the newest and more sophisticated ways to convert their illegitimate funds as lawful. Thus, regulators are continuously stressing upon the money laundering issues. On the contrary, banks and other firms are constantly updating their AML policies to address this growing threat. The most common money laundering tactics used around the world is through digital banking, smurfing, currency exchanges, physical movement of cash cross border through cash smugglers, wire transfers, investing in real estate, gambling, auctions, building shell companies, disguising the movement of money through the trading system, counterfeiting currencies, and the use of bitcoin to hide the original sources of money.

Out of all these money laundering strategies, trade-based money laundering has received relatively less attention. Trade-based money laundering leverages the international cross-border or domestic trade system to veil the sources of illicit money through trade transactions into legitimate revenues. It involves misleading pricing, less quantity, or low quality of trade such as goods and services either imports or exports. The international trade systems are seemingly very complex and prone to vulnerabilities that can easily be abused by money launderers. As it necessitates the inclusion of multiple parties and jurisdictions which as a result makes the entire due diligence process including AML checks much more taxing. Thus, making it easier for money launderers to exploit and take advantage of the system. 

A 2015 report by Global Financial Integrity (GFI),  reveals that the illegal flow of finances accounted for $7.8 trillion from developing economies between the years 2004 and 2013 which entails  83% of trade-based money laundering. 

The act of concealing money is an ancient technique used for many years, but money launderers are always one step ahead of finding the newest ways to move illegal money undetected. Therefore, international governmental organizations have underlined the need for AML products and services to detect and demarcate the issue altogether. 

 What is AML Compliance?

AML stands for Anti-Money Laundering and it is a practice being adopted by financial institutes, banks, and now even by crypto enthusiasts conducting ICOs. It is reported that crypto thefts, hacks, and frauds reached an estimated $1.36 billion in the first few months of 2020. The total amount stolen in crypto exceeded the stolen $4.5 billion in 2019. 

With central banks and international monetary organizations clamping down on tax evasion, money laundering, and related financial crimes, it is becoming more and more important for banks and financial institutions to verify not only the identity of their customers but to ensure that the sources of their funds & transactions are also legitimate. An AML compliant software is able to perform background checks for risk assessment and due diligence.

Importance of AML products for financial institutions 

AML products for fraud prevention are mandatory for financial institutions to monitor, evaluate, detect, and report suspicious transactions to the regulatory authorities as they happen. It not only strengthens the entire infrastructure but also enhances and accelerates the existing anti-money laundering processes in terms of effectiveness. AML products and services include and are not limited to transaction monitoring systems (TMS), currency transaction reporting systems (CTR), compliance software to help firms comply with AML regulations by FATF , and customer identity verification solutions. All these AML products not only automate the detection process but imperatively eliminates the root cause of the problem to prevent it from happening again in the future. AML products by Shufti Pro can help companies uncover criminal activities, and save themselves from heavy penalties for non compliance. 

 How Shufti Pro provides AML Compliance?

AML Compliance software by Shufti Pro is powered by more than 1000 checklists and 3000 databases maintained by national and international law enforcement agencies, monetary organizations, and anti-money laundry watchdogs. Not only Shufti Pro has such a large data bank to perform background checks but its system updates that data bank every 14 minutes, so that any new entry or removal from these lists or databases is timely updated as well.

AML/CFT takes a new meaning with Shufti Pro as it is not limited to a few countries or some dozen languages. This Artificial and Human Intelligence Hybrid product is available all around the globe and provides Universal Language support as well. So no matter which country a bank operates in or from where their clients belong to and no matter what is the official Language for documentation in that territory, Shufti Pro’s aml product will be a trusted companion for risk assessment and due diligence.

Shufti Pro’s AML products will be providing Robust risk assessment through its round the clock available financial crime risk data. Customer onboarding will not be an issue with AML compliance offered by Shufti Pro as it maintains an industry best processing time of 30-60 seconds. End-to-end identity verification from Shufti Pro is PCI certified and adheres to GDPR standards as well, so customer data will remain secure as well and customers of Shufti Pro will not be liable for any data theft risks, government penalties, or 3rd party liabilities.

Shufti Pro aims to create an online marketplace that is free of fraud, identity thefts, and malicious activity. Extension of AML compliance services are a testament to Shufti Pro’s resolve and it intends to fully optimize its end-to-end verification to usher a new age of due diligence and risk assessment.

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How does CDD effectively help with AML Compliance?

How does CDD effectively help with AML Compliance?

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CDD or customer due diligence in the banking sector and other financial firms is an important aspect of AML compliance. There are various international regulators that have strict guidelines issued over the years in order to clamp down money laundering and transference of funds for terrorist activities. United States’ Federal Financial Institutions Examinations Council on Customer Due Diligence (FFEIC) and the Financial Action Task Force (FATF) are among some of the major global organisations to set forth the regulations to combat financial crimes. 

Here are some of the basic pointers to help you understand the phenomenon of Customer Due Diligence for banks and other financial institutions along with AML compliance. 

Customer due diligence in banking industry

Customer due diligence means identifying who your customers are by verifying various pieces of information such as their name, address, date of birth, and official identification document obtained from a reliable and independent source. 

In today’s heavily regulated markets it is more important than ever to know your customers. Identifying them accurately using KYC processes for customer due diligence during the early stages of onboarding can ensure that your organisation does not lose money to frauds or that your institution is not charged with a fine from national or international regulators for non-conformity. The main benefit of the customer due diligence process in banking is therefore assessing the level of financial risk a customer may pose to your overall operations through a risk-based approach. There needs to be a solid effort on part of the financial institutions including banks to follow through the money trail, origin & destination of transactions, legality of the business, and revenue streams. International governments around the globe are increasingly stressing upon the importance of the customer due diligence for banks, and to have sufficient processes in place to verify and identify their customers. Customer due diligence in banking is important to prevent significant financial losses due to reputational, operational, and legal damages, caused by money laundering and related financial crimes. 

The customer due diligence process in banking ensures that the banks regularly maintain and update their policies to verify customers’ during onboarding and to determine the on-going pattern of transactions to detect money-related crimes through suspicious accounts. 

With the right customer due diligence in banking practises, banks and other financial institutions can drastically lower the risk of financial crimes and can improve customer onboarding and experience altogether.

Types of Customer Due Diligence for banks

There are three types of customer due diligence known in the banking industry: Standard, simplified, and enhanced due diligence, respectively.

Standard due diligence:

This type of due diligence process for banks involves the initial stages of verifying and identifying customers through KYC practices. Here, customers are verified based on their personal identity information and government-issued ID documents. This process is performed by a reliable and independent third-party source. Standard due diligence in the banking industry purposely prioritizes those with moderate risk elements. It is carried out to uncover the intended reason for a business partnership, in case of large transactional volume, or suspected criminal activities.

Simplified due diligence:

Based on risk assessment approaches, this type of due diligence in the banking industry involves considerable low or no risk of financial crimes such as customers who are residing in low-risk areas can be identified simply through ID documents and PII.

Enhanced due diligence:

On the contrary, enhanced customer due diligence in banking is performed when the financial risks of money laundering, corruption, tax evasion, and terrorist financing are high. It involves high-risk customers residing in high-risk areas, and they can be asked for additional identification information. Enhanced due diligence process for banks will ensure that larger funds, assets, and transactions are duly vetted to minimize the risk of crimes and regulatory penalties, consequently. Here customers are screened against Politically-exposed person (PEP’s) lists, government-issued sanctions, and blacklists.

 Beneficial Ownership & AML Compliance

A financial institute or fund managing entity also needs to identify the ‘beneficial owner’ of respective assets and accounts in question. This kind of authentication is necessary because in many cases customers that show up at a front desk are actually acting on behalf of another person in a particular transaction. This kind of transactional behavior is showcased because the beneficial owner wants to conceal their identity. This protocol of customer due diligence in banking requires you to establish the ownership structure of a company, and partnership.

To have a wider understanding, a typical beneficial owner is a person who carries out the transactional activities on behalf of the original owner. So to ensure the customer’s identity and remove any doubts customer due diligence in banking is the step forward. This kind of cautionary behavior might not seem appropriate for businesses as they may consider the customer due diligence process as burdensome but this is your best chance to prevent yourself from becoming an unwanted participant in money laundering.


Shufti Pro is a perfect solution for banking organisations and financial institutions that are looking to adopt AML Compliance in addition to customer due diligence. We offer an artificial intelligence-based SaaS product that not only provides AML compliance but KYC services as well to make the entire process of customer onboarding and transaction monitoring hassle-free for businesses around the globe.

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AML Solutions: Eliminating the Risks of Money Laundering

AML Solutions: Eliminating the Risks of Money Laundering

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Money laundering is a serious crime that can have serious and long-term consequences for your business. Oftentimes, small business owners are offered business opportunities that they can’t simply pass up. It looks like easy money, so they accept and start serving as a facilitator for money laundering. According to a PwC survey, global money laundering transactions account for roughly $1 trillion to $2 trillion annually or 5% of global GDP.

What is money laundering?

The basic concept of money laundering revolves around transforming dirty money into clean money or in a more formal way, money laundering is the process of making a large amount of money generated through illegal activity appear to have earned through legitimate sources. 

Money laundering is typically done through 3 steps: placement, layering, and integration. 

  • Placement is to put illegal money into a legitimate financial system such as a bank
  • Layering is to mask the source of money through a series of transactions and bookkeeping techniques
  • Integration is to withdraw laundered money from a legal account and utilize it

Know more about money laundering process in this demo:

The money laundering is generally accomplished through currency exchanges, wire transfers, smurfing, and shell companies. Moreover, the globalization and digitalization have expanded the capabilities of money launderers, making it more difficult to identify the source of the transaction. Online banking, P2P services, money exchange businesses, and now cryptocurrency have made it difficult to detect the illegal transfer of money. 

However, laundering money is a serious offence. It could lead to heavy fines, penalties and even jail time. According to International Comparative Legal Guide, the maximum penalties for laundering money are fines up to $50,000 or double the amount of property involved, whichever is greater, and imprisonment up to 20 years for each violation. 

Risk of money laundering for small businesses

Small businesses are often the victims of money laundering. Criminals target small businesses because the owners of such businesses lack experience and knowledge about the risks involved with a certain type of business dealing. Further, they don’t have allocated resources and knowledge about Anti Money Laundering (AML) compliance.

Protecting your business against money laundering

By adopting anti-money laundering solutions and practices, you can protect your business from money laundering threats. 

What is Anti Money Laundering?

Anti-money laundering or AML is a methodology or a policy that governs: how the company monitors transactions, detects and reports financial crimes to the regulatory authority. For this purpose, companies adopt different AML solutions that screens and tackles money laundering risks, which the company faces or could face in the future.

AML compliance was first coined with the formation of the Financial Action Task Force (FATF) in 1989. The main concept for its formation was to devise international standards to prevent money laundering and to promote these standards.

In past AML laws has been slow to catch up with cybercrimes, since most of the AML solutions were deployed for traditional banking institutes. However, amid the digital transformation, FATF and other regulatory authorities started focusing on digital transactions and devised stringent regulations to prevent money laundering using digital platforms.

To follow and comply with these regulations, businesses need AML solutions that could detect suspicious transactions and perform due diligence during the onboarding process.    

Automated AML solutions for enhancing AML process

Artificial intelligence and machine learning have been transforming different operational sectors in the finance industry. Automating the tasks that involve data processing and analyzation, filtering out false alerts, and identifying complex criminal conducts are some of the tasks that are being automated using artificial intelligence. To prevent money laundering, banks and other financial institutes use AI-driven AML solutions. These systems are used to identify and categorise suspicious transactional activities.

AI is deemed crucial for performing repetitive tasks while saving time, resources and efforts, which can be reallocated for other tasks. Natural language processing and machine learning are usually adopted for automating AML screening tasks. 

6 Ways AML Solutions can prevent Small Businesses from Money Laundering

Here are ways in which AI-driven AML solutions have revolutionised customer and business screening.

Enhanced due diligence

Artificial intelligence automates the enhanced due diligence process. It starts by taking steps to ensure you know who you are dealing with, understanding and monitoring their transactional activities and accessing their risks of money laundering.

Monitoring transactions and activity

AI-powered risk-based solutions and procedures help monitor ongoing customer activity to detect fraud, as well as money laundering activities including but not limited to placement, layering, and integration of funds.

Reviewing odd patterns of transactions

In most of the cases, launderers use hundreds of different accounts to perform small transactions that can easily surpass without being detected. While it’s difficult for humans to identify such transactions, automated AML solutions can easily identify such smaller transactions and reveal a pattern of illegal activity related to money laundering or terrorist financing.

Identifying Politically Exposed Persons (PEPs)

PEPs compliance is mandatory for firms. It is crucial to identify the risks associated with your customers. According to FATF, any person who is or has been holding any public office or function is a politically exposed person and to do business with any such entity, organisations should perform enhanced due diligence and monitor their ongoing transactional activities.  

Money laundering is a serious risk for small businesses. In addition to facing criminal charges and hefty fines. Involving in money laundering activity intentionally or accidentally could lead to fines and may damage your brand reputation. With this in mind, small business owners need to study and comply with AML regulations. 

An inside look at the need for AML in the e-gaming industry

An inside look at the need for AML in the e-gaming industry

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Data analytics and trends show the penetration of the population into console-based online video games and smartphone gaming applications. Online video gaming platforms having microtransaction features tend to handle much of financial transactions on their own, they are not considered a bank or a saving association. Therefore do not lie under the regulations of the Office of Foreign Assets Control or Bank Secrecy Act (BSA). However, the facility of financial transactions to buy gaming assets are raising several security challenges in the e-gaming industry. 

Financial frauds, the major threat the e-gaming industry is prone to. Money laundering, a huge financial crime is facilitated using the gaming industry a medium. By selling digital goods and currency (in-game), money laundering activities are conducted. The rise of online gaming has opened the ways for fraudsters to conduct financial crimes in the complex environment in which players operate. The loopholes in the gaming systems are well-analyzed and misused by laundering millions. This is challenging for the e-gaming industry to regulate the sector and deter the risks of financial crimes. 

Moreover, money launderers use e-gaming platforms to convert embezzle funds into good money. The video game industry can reduce money laundering activities by taking in place dynamic AML practices that filter out the bad actors beforehand. 

Anti-Money Laundering and Countering of Terrorist Financing (AML/CFT)

To disguise the ownership of illicit funds, money launderers use several means to hide money or convert it into legitimate money. The money that is earned as a result of cross-border organized criminal activities is concealed by money launderers either by transferring it across the world or buying properties with that. This is what happens in the online gaming industry. Assets are bought with in-game currency and in the form of assets, money is laundered. 

Having a comprehensive AML and CFT program is not only a regulatory requirement but a business practice on which business reputation, as well as profits, are dependent. Moreover, to fight against the criminal liabilities facilitated through e-gaming platforms can better be avoided taking in place stringent AML and CFT actions. 

Player identification

Online casinos’ major concern is fraud prevention. Especially money laundering that is residing in the industry can better be prevented by identifying each onboarding player at the time of account registration and financial transactions. Customer Due Diligence and AML background checks should be implemented in real-time while onboarding a player. This will help build a clean customer base.

Player identification usually can be performed by verifying the identity details. By authenticating official ID documents, KYC compliance can be achieved. The real-time captured information is then validated against the updated global watchlists. AML screening is performed during identity validation in which various AM background checks are implemented that ensure the identity’s data against exclusion lists such as;

  • Sanction Lists
  • Government-issued Data Sources
  • Watchlists
  • Money Launderers
  • Criminal Databases
  • Politically Exposed Persons (PEPs) List

By collecting the extensive details from identity and validating them against criminal databases, online casinos and gaming platforms can build a compliance program that can help them comply with local and global regulatory obligations as well as protect their business from any monetary loss. 

Moreover, ongoing identity monitoring is equally important. One time identity verification can not help eliminate money laundering activities entirely. In-between identity verification deters the risks of malicious transactions and suspicious activities. Just to overcome the effort of identity verification, biometric identification can help in robust verification without compromising user experience and keeping intact the security perspectives simultaneously. 

Other money-laundering countermeasures

Other than verifying the identity of a player, countermeasures can be taken that prevent the direct and indirect approaches of fraudsters of laundering money. These measures are:

  • Detective and preventive controls in assistance with technology should be taken to investigate if some players are exchanging the information among themselves to cheat the gaming system and perform money laundering.
  • Preventive measures against identity theft should be taken to avoid the misuse of someone’s identity by the fraudster to launder money. 
  • The customer information collected at the time of identity verification should be protected from any uncontrolled/unauthorized access. 
  • The customer’s credit card details should be protected from unauthorized access.
  • Enhanced Due Diligence measures to combat money launderers from entering into a legitimate system.
  • Prohibiting direct payment system between customers.
  • Monitoring the transactions between countries and immediate blocking when money is sent to some country that does not register previously as the home country.
  • Reporting of suspicious transactions to the Financial Intelligence Unit.

Risk-based approach

Online gaming companies are required to evaluate the measures they have taken to counter bad actors and their malevolent activities in an online environment. Identification of risks and mitigating them to avoid severe circumstances is the priority of every business. Assigning each onboarding identity a risk rating can help prevent money laundering in the e-gaming sector. With the risk rating approach, gaming companies can develop appropriate AML and CFT measures to combat potential threats. 

Future prospects to combat money laundering in e-gaming

The online video gaming industry will be evolving in the years ahead and create new opportunities for enhanced monetization. By employing an enhanced identity verification framework, the e-gaming sector can proactively avoid regulatory fines and penalties. Identity verifications supported by AI-based and machine learning models that facilitate automation facility would be the future of combating money laundering from the online gaming industry. Hence, providing a financially safer platform and a secure environment from bad actors. Moreover, improved revenue generation opportunities for e-gaming seems to be on the way in years ahead. 

Danske to face $2 billion fine for money laundering

Danske to face $2 billion fine for money laundering

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According to Jyske Bank, Danske will probably be fined around 13.5 billion kroner (around $2 billion) over the money laundering case by authorities in Denmark, the USA, and the UK, as the investigations in Europe’s biggest money-laundering scandal draw to a close.

Danske Bank was previously indicted for suspicious transactions of 200 billion euros at there Estonian unit. The Denmark-based bank is cooperating with probes by the U.S. Department of Justice and U.S. Securities and Exchange Commission, among others. Another writ, which was filed on December 27th, 2019, in the district court of Cophengan by law firm Nemeth Sigetty, is for about 1.5 billion kroner, according to a statement.

Penalties tied to investigations will drive up Danske’s operating expenses to 42.4 billion kroner this year, according to an analyst at Jyske Bank. The costs are expected to return to normal next year.

As Danske Bank released the full dimensions of laundering scandal in September 2018, it’s shares have taken a beating. It now trades at large discounts to peers and Jyske, which recommends buying the stock, says the current price more than incorporates the consequences of the money-laundering scandal.

AML Screening in the light of Compliance Regimes Around the Globe

AML Screening in the light of Compliance Regimes Around the Globe

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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 pro 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


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.


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 Pro is the ultimate AML compliance solution:

AML compliance is made easy with the Shufti Pro 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 Pro 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 Pro 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.

3 Stages of money laundering – How AML screening guards your business

3 Stages of money laundering – How AML screening guards your business

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The United Nations Office on Drugs and Crime found that 2 to 5% of global GDP is laundered every year. It is a global epidemic which starts with acquisition of illegal funds through criminal activities and conducted through banks and businesses. The ultimate adverse effects of money laundering impact banks, businesses, and country economies.

Money launderers are a very clever lot. They are constantly looking for loopholes to exploit. They can sneak into your business as well, which is why it is essential that you understand how they operate. Banks and financial institutes are their primary target but other businesses are on their hit list too. One effective method in this regard is to implement AML screening.

Money laundering is the illegal movement of black money through several transactions, conducted through financial infrastructure. It is conducted in three stages to manipulate the authorities.

3 Steps of Money Maundering

There are three stages of money laundering, each with a unique purpose. The first stage is placement, second is layering and third is integration.

1- Placement of Money

This is the first stage where the process starts with the physical placement of money in the financial infrastructure, for instance, in a bank, casino, local or international shop or (currency exchange). It is conducted by investment in financial and non-financial assets.

In this stage, the criminal entities enter the business ecosystem as a customer, investor or vendor. Placement is conducted through several methods, a few are mentioned below.

  • Smuggling Currency Physical movement of currency or financial instrument such as bonds across the border
  • An Accomplice BankA banker that knowingly accepts deposits from smugglers and criminals
  • Currency exchanges – Where there is liberalization of the foreign exchange market, there is room for laundering money
  • Securities broker – The securities brokers who would put investment into different tranches to divide it to thwart any suspicions
  • Blending funds – Criminals might open front companies to fool the authorities. Then, they start mixing the dirty money with the clean one. It’s akin to hiding cash within cash
  • Asset Purchases – The most obvious form of laundering money is to purchase big assets. Once the transaction takes place, tracing back the source of income can be a challenge

2- Layering of Money

The second stage of money laundering is layering.

Layering is conducted to conceal the original source of funds. Businesses and financial institutions are used in every layer of money laundering. Below are some common methods used for layering:

  • Converting dirty money into financial instruments. Banker’s drafts and money orders are readily used for this
  • Buy and sell. In this case, the criminal buys a large asset with illegal money then sells it, locally or internationally. After this buy-sell cycle, tracing the asset back to the criminal’s source of income becomes difficult.       
  • Buying and selling real-estate assets, financial assets, etc.

3- Integration of Money

This is the phase where laundered money is brought into the economy, usually through the banking system. It is different from layering because here usually an informant tells the law enforcement agencies about it;

  • Property Dealing – Buying property from illegal money is a common form of laundering money. Usually, this is done through a shell company.
  • Shell Companies and Fake Loans – The culprits create a fake company and then give a loan to themselves. This loan amount is the laundered money
  • Foreign Banks as Accomplices – If a foreign bank is an accomplice in laundering money it would be difficult for law enforcement to investigate and act since such banks are protected by international laws.
  • Bogus invoices from import/export – Money launderers also use import and export as a way to enter black money into the system. They would exaggerate a bill to justify the payment by creating fake invoices or inflating the value of funds received from exports.

Most common Businesses used for Money Laundering

It is a common belief that financial institutions, especially banks are used for money laundering. Criminal entities have found loopholes in every industry to perform layers of money laundering. Banks have a major risk because they’re used in all stages of money laundering. 

That is why banks and businesses are required to perform KYC/AML screening on their customers, and vendors as well. Global and domestic authorities are always in a bid to find any loopholes in the financial infrastructure that might be exploited by criminal entities. Commonly exploited businesses for money laundering are listed below:

Banks: Banks are exploited for placement, layering, and integration of money. Banks are used for transferring money and making sales and purchases of financial assets. 

Fintech businesses: Fintech has provided financial services to the unbanked people. Online payment solutions, cryptocurrencies, and digital exchanges are used for money laundering. Primary reasons are lack of regulatory obligations, weak security protocols, lack of customer screening practices, etc. 

Real-estate: Real-estate is used in layering of money. As this sector is still not regulated in many regions of the world, criminals find it easy to manipulate the proceeds of real-estate deals. 

E-commerce: Criminals use fake or stolen identities to onboard e-commerce platforms. It helps them to make purchases with illegal money, later they sell the goods, to make layers of transactions. Sometimes they pose as a vendor and use fake identity to sell goods to a legitimate merchant. Later they manipulate the business proceeds to incorporate black money within. 

Legal professionals: Law firms are exploited in the integration phase of money laundering. In this phase, they use the services of legal firms to integrate their money. They hide the original source of money and utilize the professional expertise of legal professionals to legitimize their black money.

How to Keep Your Business Safe

Compliance measures such as Know Your Customer (KYC) and Anti Money Laundering (AML) are extremely helpful in keeping your business safe. Since in the majority of money laundering cases, some form of banking service is involved, AML screening and KYC compliance are mandatory for banks and financial institutes.

Compliance is not that difficult especially when you are using professional AML screening solutions. When a bank gets defamed for helping in laundering money it is not necessarily the entire bank that is responsible. It could be just an individual acting in their individual capacity.

By integrating third-party services such as Shufti Pro, the banks can put in highly effective AML screening and KYC checks. This not only protects your business from money launderers but ensures compliance as well. Video KYC will help banks to eliminate cybercrime by screening their remote customers online through a live video call. It is the substitute for in-person verification and empowers banks to gain competitive edge by onboarding customers online from all over the world.

Billion Dollar AML Compliance Plan for the Financial Sector

Billion Dollar AML Compliance Plan for the Financial Sector

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The financial services sector has long been blamed for the spread of financial crimes like money laundering and tax evasions. Over the past ten years, banks and financial institutions all over the world have faced billions of dollars in fines due to non-compliance and failure to implement adequate regulatory requirements. The regulatory authorities in the US, in particular, have been extremely active against non-compliance with Anti Money Laundering (AML) regulations. The US Department of Justice doled out fines worth $14 billion to financial institutions. That covered over half the sum of global financial regulatory fines over the past decade. All in all financial regulators have collectively imposed over $26 billion by way of sanctions and fines to banks and financial institutions around the globe.

More stringent compliance regulations can be dated back to the 2008 financial crisis. Ever since then global regulators have been rallying to make the financial services sector safer and more transparent. More than 50,000 regulations were distributed between 2009 and 2012. Several high profile scandals erupted in the wake of increased regulations all over the world. To date, the single highest fine against one financial institute was of $8.9 billion, wherein the bank, BNP Paribas, admitted its fault.

Are Non-Compliance Fines Avoidable?

What is surprising is the fact that these fines and sanctions are completely avoidable. The cost of establishing and maintaining an effective compliance structure is nearly three times less than the losses faced by banks in the form of non-compliance penalties. The financial services sector has been battling with the best way to approach compliance regulations. Compliance structures in banks are outdated and slow. The biggest obstacle for banks to implement an effective procedure is the lag it causes in the client onboarding process. Verifying every client and carrying out the due diligence takes time and tends to frustrate clients, thus lowering satisfaction levels for a financial institution.

Banks end up spending over 2.7 billion pounds – $3.5 billion – every year on AML compliance systems that are both outdated as well as inefficient. Legacy systems are still in use by some banks that churn an inexplicable amount of false positives. As the compliance staff chases after false leads, they end up spending their energies on validating cases of fraud rather than investigating them.

In order to avoid millions, or possibly billions, of dollar in fines, financial institutions build colossal compliance regulatory structures within their business, spending millions. They often have to hire an army of compliance officers, just to keep up with the changing regulatory framework.

Achieving AML Compliance Through Technology

There are, however, better ways to approach AML regulations. Modern technology can contribute a great deal towards building better compliance structures in financial institutes. The Fintech sector has long been working on developing systems that are both effective and efficient. This technology is increasingly being referred to as regulatory technology or RegTech. RegTech systems are now using technologies like artificial intelligence and machine learning to make compliance functions easier for banks.

One way to approach AML compliance is through suspicious activity reporting. Systems that use machine learning algorithms are used to detect suspicious transactions. These algorithms learn from past behaviour and data to flag fraudulent transactions. More to the fact, they are used to monitor a client’s transactions to determine their normal behaviour. Every time any suspicious or potentially fraudulent transaction is detected on a client’s account, it is either blocked or an alert is issued to the management to take the appropriate action.

Read More: RegTech facilitates effortless AML Compliance

In addition to AML regulations, financial regulators have also issued KYC or Know Your Customer requirements for businesses to adhere to. These obligations further bind financial institutions to conduct enhanced due diligence for high-risk clients. The proliferation of tech solutions in the market has made it easier for banks to fulfil these requirements.

Other tech solutions also provide AML screening checks to fulfil AML requirements for financial institutes. AML checks screen a customer’s name through global sanction lists issued by global regulatory authorities. Screenings of clients can be performed in real time and take place in the background, so as not to disrupt the onboarding process.

Banks can now avail the services of a KYC service provider to authenticate their clients’ identities. This allows them to make sure that their customers are not using fake credentials or stolen identities to open a bank account or avail other financial benefits. The bank asks for a proof of identity from a client during the onboarding process, and authenticates their identity in real-time, with the help of digital ID verification.

The Future of AML Compliance

As the hype for technology-based solutions for implementing compliance structures is at its highest, financial institutes need to evaluate their existing procedures. The financial services sector is fast coming to terms with the prospect of implementing fast and productive AML solutions to decrease their costs. In a way, investing in tech solutions seems the most effective approach for banks to save billions of dollars in non-compliance costs.


Flexentral joins hands with Shufti Pro for KYC & AML

Flexentral joins hands with Shufti Pro for KYC & AML

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BATH, UK – (October 8th, 2018) Shufti Pro has partnered with Flexentral to provide its next-generation KYC and AML compliance services to this blockchain based company. Flexentral is basically a developer and publisher of a digital platform software that intends to simplify work management and make it flexible for managers and workers. Shufti Pro is an AI-based end-to-end identity verification SaaS product that offers multiple validation services to its customers.

Flexentral tends to introduce a harmonized platform where digital advancement of the modern age are utilized to make project management and task completion hassle-free for users. In doing so, it covers the entire work cycle starting from the recruitment of employees, leading to contracting and eventually resulting in payment at the completion of the assigned task. Powerful analytics tools are also part of the product so that project managers can get a visual brief about worker performance and progress they have achieved in light of payroll paid to workers.

To put it simply, Flexentral wanted to cater 2 categories of users: one who needs work done and the other that can do that work. But creating a reliable platform where trust dictates the terms of engagement led Flexentral on a search for a reliable KYC partner. Due to its blockchain based technology, in-app payments to workers from managers were also required to be made in a cryptocurrency. “Grain” was chosen as the token currency to pay for the services rendered by workers for managers on this digital platform. To ensure honest and transparent transactions, AML compliance was also necessary. The search of Flexentral concluded with Shufti Pro that promised similar flexibility as was desired by the European tech company. Shufti Pro can perform real-time KYC verifications with AML screening checks being performed in the background.

Talking about the collaboration between the 2 companies, CEO of Shufti Pro, Mr. Victor Fredung, said:

We were impressed by the business model of Flexentral as it had a lot of things common, in principle, with Shufti Pro. We are all for transparency and trust. Same was the intention of folks at Flexentral. Teams of experts from both companies shared ideas and worked diligently to integrate KYC verifications and AML checks from Shufti Pro into the digital platform from Flexentral”

Shufti Pro is already a GDPR compliant product which further made the decision easier for Flexentral to opt for this AI based ID verification product. Data security and usage of personal data for an explicit purpose were already clearly defined as per GDPR guidelines ensuring that Flexentral will not encounter any unnecessary compliance issues or monetary fines. The integration process was flawless as Shufti Pro maintains an updated API and SDK integration documentation.

About Shufti Pro

Shufti Pro is an emerging name in ID verification services. It was founded on 31st October, 2016 in Bath, UK. The goal of the company is to enable its clients with seamless customer experience, fraud prevention and undeterred revenue generation. The company offers state of the art SaaS, which engages Artificial Intelligence and Human Intelligence to provide ID verification services. Businesses can now conduct easy digital verification processes with lesser friction and more advanced technology. Currently offering its services for all countries of the world along with Universal Language Support, the company is located in United Kingdom with its global office in Sweden.

Please visit Shufti Pro here.

Shufti Pro Limited

[email protected]

Unit C401, Westfield Shopping Centre,

Ariel Way, London, W12 7FD

About Flexentral

Flexentral envisions an open, honest and transparent labor economy, servicing tasks and work with a platform providing instant insight in compliance, diversity and budget.

Smaller Banks are in dire need of AML Compliance to avoid fines

Smaller Banks are in dire need of AML Compliance to avoid fines

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Smaller banks are being considered an easy target for money laundering activities because of their smaller base of operations and little to no regulatory oversight for their account holders, increasing the need of AML Compliance. It has been recently revealed by Mr. Jesper Berg, head of Denmark’s official watchdog tasked to oversee banking operations around the country. He made this claim after country’s biggest bank was found to be used to perform billions of dollars worth of money laundering. This money laundering activity was being performed by not some criminal elements of Denmark but financial criminals from Russia, Azerbaijan and Moldova used country’s largest bank Danske Bank A/S to carry out money laundering of nearly 8 Billion USD.

Why Smaller Banks are at risk?

Smaller Banks, even in highly regulated economies, are vulnerable to money laundering activities because of the nature of their operations. Financial regulators have already seen trends where smaller but frequent transactions are used to launder money on behalf of criminal elements. Even in the above stated case, USD 8 billion worth of money laundering was done from 2007 to 2015. So the smaller banks, with moderate assets and not so large banking operations are neglected, or at least not vigilantly monitored by financial regulators across the globe for AML Compliance. This creates a window of opportunity for money launderers and financial criminals to whitewash their funds using multiple accounts in branches of smaller banks in moderately populated cities where the staff might not have much understanding of AML compliance

Anonymity of these far off branches and even smaller size of bank creates opportunities that can be easily exploited by financial criminals even before any unusual activity comes on the radar of financial regulators tasked with AML compliance. This is a perfect example of flying under the radar without being noticed for an extended period of time. A string of such banks accounts can create a paper trail that can not be easily identified in the haystack of a country’s banking sector.

Another factor that leads to the smaller banks being exploited for money laundering activity is their lax approach towards AML compliance. Not only shortage of funds lead to this approach but the typical customer base of such banks also require them to be not vigilant about the kind of transactions being performed from the banks’ accounts. In a world where major banks are spending billions and are staffing hundreds of employees in their AML compliance departments, smaller banks find it hard to allocate such huge resources to ensure compliance with AML guidelines set forth by national regulators.

AML Compliance for Smaller Banks

But as a legitimate business operating within the territorial boundaries of a country, the mere small size or insufficient resources of the banking organization does not serve as an appropriate excuse for being used as an accessory to a crime like money laundering. A bank found involved in money laundering activities, even unwillingly, risks to be fined multi million dollars in regulatory penalties that for sure is death blow to the operations of such smaller banks. It means that money laundering is a genuine cause of concern not only for larger banks but smaller banks are even at greater risk if found to be in breach of AML Compliance.

So in the absence of satisfactory monetary resources and keeping in line with a futuristic vision, fintech turns out to be the only savior for smaller banks around the globe. There are many AML Compliance solutions available around the globe that can enable smaller banks to follow AML guidelines of their national regulators without spending a fortune on compliance departments.

Shufti Pro is an ideal choice for smaller banks, no matter which part of the world they are operating in. It is an Artificial Intelligence based end-to-end verification services provider that is offering KYC as well as AML Compliance to a worldwide clientele.

It has a huge data bank comprising of 1000 Watchlists and sanctions list in addition to data from 3000 databases maintained by national, regional and international watchdogs. This vast databank is updated every 14 minutes and a small bank will be playing a very small amount to ensure AML compliance against their customer base.

Asian Banks push for greater Fintech to cut down AML Compliance cost

Asian Banks push for greater Fintech to cut down AML Compliance cost

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Asian Banks are now asking their regional and national regulators to allow more fintech in order for them to cut down AML compliance costs. Recent months have seen regulators and financial watchdogs – especially in Far East and Southeast Asia – slapping huge fines and tightening overall AML guidelines. Both these measures have an impact of double edged sword for the revenues of Asian banks that simultaneously dwindled in the light of multi million dollar fines and compliance costs. This is the reason why banks are looking to employ cheaper yet effective fintech to perform AML compliance in place of large swaths of compliance staff.

 AML Compliance Costs

Asian Banks have millions of accounts, tens of thousands of bank branches and billions worth of american dollars being transferred on daily basis. This huge scale of operations demand an equally huge workforce to ensure compliance regarding AML guidelines issued by financial watchdogs and regulators. On average, in 2017 there were 307 employees tasked to make operations of a financial institution compliant with AML guidelines applicable in this region. This is more than 4 times the number of employees that were working on average in a financial institution to perform AML Compliance in 2016.

HSBC, one of the major Asian banks having strong presence in the region, spent in excess of USD 3 Billion, just in 2017 for AML compliance and tripled its human resource in the span of 4 years. It has now 8600 employees on its payroll only performing compliance based operations.

What Fintech can do for AML Compliance?

Right now, fintech is the only logical and workable solution for Asian banks to cut down cost on compliance measures without seriously affecting their crusade against money laundering activities. Despite a large number of AML Compliance staff, financial criminals have been able to find out ways to circumvent AML Compliance measures of these banks, leading financial regulators to fine huge monetary penalties over these banks.

In a recent case, Commonwealth Bank of Australia was fined hundreds of millions of dollars by Austrac when it was find out that thousands of accounts were not being monitored under AML compliance guidelines of financial watchdog. Fintech can defeat both known and unknown money launderers and can detect suspicious transactions  in far less time as compared to a human staff of compliance officers. Automated systems developed by Fintech can run background checks in a few minutes to check the past transaction history. In case of an usual amount of online funds transfers, a 24 hour vigilant AML Compliance solution can redflag the account for the banking staff. 

Why regulators are reluctant about Fintech?

Well there is no stated or on-the-record resistance shown by regulators for introduction of fintech in order to provide AML Compliance. Infact, financial watchdogs have been encouraging about the use of fintech in banking sector and financial institutions. But they always require banks to utilise technology and manuals that are pre-approved by the regulators for use in banks and financial institutions. This creates a bottleneck to gain approvals for fintech given the limited technological expertise of financial regulators and even smaller number of individuals tasked with approval of fintech. Bureaucratic behaviours and red-tape slows the process of approval of fintech, thus forcing banks and financial institutions to employ higher number of workers and spending millions of dollars while fintech software spend months and months in approval grind mill.

Best Solution

When it comes to fintech for AML Compliance, there is hardly any match of the Artificial Intelligence backed Shufti Pro. It is an end-to-end ID verification SaaS product that provides a comprehensive suite of verification services and one of them is AML Compliance. Shufti Pro has gathered a large databank to perform background checks for AML Compliance. This huge dataset contains information from 1000 Watch lists, Sanction lists and Politically Exposed Persons list. In addition to that, individuals and enterprises present on 3000 databases of international watchdogs are also part on this databank.

Shufti Pro makes sure that every new customer of a bank or financial institution is checked against this vast databank to ensure that no person red flagged in any part of the world for his/her involvement in financial crime, becomes part of bankroll or account list.

EU’s 4th AML Directive Aims to make the Payment Ecosystem Crime Free

EU’s 4th AML Directive Aims to make the Payment Ecosystem Crime Free

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On June 26, 2018, the European Union landed the fourth AML directive that is targeted at combating cryptocurrency crimes.

With the new EU AML directive in place, it is deemed that crypto-related crimes shall take a serious hit. Being an unregulated currency, crypto money poses a high risk of frauds entailing money laundering, identity theft and terrorist funding. Therefore, this directive might just be that ray of hope regulatory authorities awaited. 

What Do New EU AML Directives Bring to the Table

The new rules imposed by the EU serve to better explore and comprehend the risks associated with cryptocurrencies, enhance the communication between the Financial Intelligence Units (FIUs), and imposing all-inclusive monitoring on high-risk transactions, especially those originating from third-world states. This would maintain the integrity of the region’s payment system, while impeding the efforts towards terrorist financing and money laundering.

Around forty new suggestions by the Financial Action Task Force (FATF) have been incorporated in the new directive. It has been decided that along with the EU, the EBA, ESMA (ESAs) and EIOPA will also be taking risk assessment and combating measures.

Implementation of the Stricter Side of Rules

An alert and active checking on cash transactions amounting to ten thousand euros has been implemented. This limit has been brought down from fifteen thousand euros. Any transactions exceeding the aforementioned threshold will be considered as ‘obliged entities’. This comes under the extended AML regulations that now place wider range of restrictions on monetary exchanges that are over a particular amount.

Real estate agents have also had to face the extended rules applied by the EU. These are not just applicable to the dealers who buy and sell properties; even those who sublet the properties are also placed under the microscope. It will ensure no business is contributing towards terrorist funding and any illicit activities.

This restriction is not limited to cash exchanges and real estate agents only, rather, gambling companies were placed under scrutiny as well. Providers of such services shall be ranked as obliged entities as well and can be removed provided they pose a medium-high money laundering risk. Only low-risk providers shall be deliberated over and may be allowed to stay in business.

EU Member States Jump up to the Mark

All the states that come under the European Union are obligated to create and maintain central registers wherein the details concerning the ownership of Anglo-American trusts and various corporations are logged.

This ensures that the transparency rate with regards to the data for beneficial ownership of organizations remains high, and the quality of the same becomes superior.

Access of this information shall be available to the Financial Intelligence Units (FIUs) so Customer Due Diligence may be ensured, under the revised and extended AML legislation requirements.

Furthermore, in order to gather information about the Anglo-American trust structures, certain individuals and corporations may also be allowed to access the data present in the central registers.

Effect on Compliances and Global PEPs Lists

With an expanded scope of the fourth AML directive in place, the number of people considered out of line as also increased. This means that global watch lists, sanctions lists and PEPs will have to be updated to include individuals who are a part of governing bodies of various political parties.

It is stated in the revised regulation that financial institutions like banks, investment firms, and other institutions will comply group-wide. Business of all kinds for and with such institutions will be halted in countries where all AML directives and stances taken to combat terrorist funding activities are not complied to.

In addition to that, appropriate measures will be taken against the states that refuse to comply with the AML directive. Aside from the official warning that will be issued to these states in observation of such a legislative breach will include but won’t be limited to a fine of at least one million euros. For banks and financial institutions, this fine would amount to anything greater than or equal to five million euros.


To sum up, along with the previously enforced GDPR rules, the new fourth directive of the AML legislation has brought together the European Union states to work and fight against the terrorist funding, crime financing and money laundering activities. The actions taken against them are bound to have positive effects on the payment ecosystem of the EU, with resource drainage in the right places rather than towards illegal and criminal practices.

In this day and age, it is highly imperative that companies and businesses opt for identity management applications to safeguard their operations against fraudsters and money launderers. Shufti Pro can help enhance security and guard organisations before any losses are incurred.

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FSA demands greater AML Compliance from Japanese Crypto Exchanges

FSA demands greater AML Compliance from Japanese Crypto Exchanges

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In a recent move, Financial Services Agency (FSA), the Japanese Financial regulator, has demanded crypto exchanges operating in its jurisdiction to tighten their AML compliance procedures in order to eradicate any chances of crypto currency being used as a source of money laundering activities or to fund terror activities. This new set of directives seems to be next logical step in series of regulatory measures adopted by FSA in order to make sure that virtual currency gateways are not used for financial crimes.

New directives for AML Compliance

According to one crypto exchange, the FSA has required of the exchange to take the following measures:

Perform an intense review of the management system

Build out risk management system for anti-money laundering and combating the financing of terrorism

Build out management system for rejecting antisocial forces, etc.

Build out management system for user assets and take a managerial approach to books and documents

Build out management system for user protection measures

Build out management system for system risks

Build out management system for user information safety

Build out management system for ensuring the appropriate interactions for complaints from or consultations with customers

Build out risk management system for the listing of new virtual currencies

A third party shall verify the improvements’ appropriateness and effectiveness

The six crypto exchanges asked to fortify their AML setups were bitFlyer, Tech Bureau, BTC Box, Bit Point, Quoine, and Bit Bank.

Why FSA wants greater AML Compliance?

Although, considered to be a liberal when it comes to cryptocurrencies, Japanese financial watchdog has decided to regulate crypto-sphere with much more vigour from now on. Clear notices have been sent out to 6 major crypto exchanges of Japan, with a demand to “improve their business processes” in order to ensure greater transparency and follow AML Compliance guidelines. This new initiative has to do with renewed interest of  regulators across the globe to maintain the overall AML Compliance for not only conventional banks & financial institutions but to formalise the operations conducted by crypto exchanges as well. Another fact that is attributed to the Increasing pressure from International watchdogs and organisations tasked with monitoring financial crime risks to global economic order. These big guns are asking major economies to ensure that crypto currencies and entities involved in this business are more forthcoming and transparent in their operations.

Several national regulators are trying to streamline the business of crypto exchanges just like regular banking sector. These new directives from Japanese financial regulator is the right step in the right direction. Surely there are going to be few hiccups in the way. Crypto exchanges and virtual currency enthusiasts might not be very comfortable with renewed regulations. But at the end of the day, it will ensure greater credibility and easier customer on-boarding for crypto exchanges. AML compliance will help crypto exchanges to earn trust of their potential customers who have legitimate business operations and that are looking forward to use this untapped financial arena without any criminal intent.

Perfect AML Compliance for Crypto Exchanges

Technological advancements in FinTech allows crypto exchanges to introduce much more vigilant approach to adopt AML Compliance. There are several identity verification products available in the market but the one that beat each one of them is for sure Shufti Pro. It is an end-to-end identity verification product that has already serviced many crypto exchanges and assisted them with robust background checks.

Shufti Pro has a large data bank that comprises of people and businesses that are red flagged by international, regional and national financial regulators. Shufti Pro performs background checks from the databank that contains names from 1000 Watch lists, Sanction Lists and Politically Exposed Persons (PEPs). Not only that, but it also has data from 3000 databases maintained by financial crime risks organisations. Shufti Pro databank includes organisations and individuals blacklisted not only by FSA but by UN, Interpol and AUSTRAC apart from many others. This databank is updated every 14 minutes so that the background checks are 100% accurate.

Crypto exchanges that want to comply with AML guidelines of their respective regulators, Shufti Pro is one of the most secure investments they can make. Customer Due Diligence is made easier with Shufti pro and regulatory scrutiny can be easily avoided by Artificial Intelligence powered by Shufti Pro.

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AUSTRAC tightens regulations for enhanced AML Compliance

AUSTRAC tightens regulations for enhanced AML Compliance

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Australian regulator AUSTRAC has imposed a multi million dollar fine on Commonwealth Bank of Australia (CBA) for failing to report on money laundering activities. The main financial regulator in Australia has strengthened its resolve to clamp down on money laundering activities and has directed all the banking organisations to adopt more vigilant KYC and AML Compliance measures. The fine on CBA was nearly AUD 700 million and was brought upon by the fact that CBA failed to report on money laundering activities being performed through its various accounts. Transactions were made through CBA accounts that eventually enabled drug traffickers and money launderers to get a hold of funds using CBA’s banking system.

What went wrong with AML Compliance?

Failing of Commonwealth Bank for AML Compliance system was manifold ranging from late reporting of suspicious transactions and going to the extreme fringe of not monitoring accounts for at least 3 years. Summary of failures admitted by CBA to AUSTRAC are as follow:

  • Late filings of 5300+ reports about transactions exceeding AUD 10,000 in bank’s Intelligence Deposit Machines (IDMs). According to AUSTRAC regulations, CBA has to report this kind of transactions within 10 days to the financial regulators.
  • CBA was not able to perform background checks on over 778,000+ accounts in a period that lapsed between October 2012 and October 2015
  • CBA also admitted that 149 suspicious reports in these 3 years were either filed lated or not at all to AUSTRAC.
  • CBA did not perform background checks on 80 suspicious customers and was not vigilant enough about the activities performed by certain amount of accounts in the aforementioned time period of 3 years.
  • Bank also admitted to the fact that there were at least 14 instances when it did not assesses the financial risks and that regulatory compliance was overlooked for deposits received in IDMs.
  • In the most shocking confession, CBA also admitted to the fact that it was unable to report million of dollars worth money laundering being performed in violation o  f the clearly defined AML Compliance guidelines of AUSTRAC.

CBA earlier blamed a coding error for the major lapse in AML Compliance or at least for not monitoring the activity and customer onboarding process in the time period of October 2012 – October 2015. Later on, bank admitted their fault in failure to report suspicious accounts and funds transfer in order to prevent a larger regulatory penalty.

A compromise was reached between the bank and AUSTRAC after which CBA admitted its lack of vigilance for AML Compliance and was fined a far lower fine as compared to what it would have to pay in case AUSTRAC decided to fine the bank on per discrepancy/failure to report basis. It is estimated that confession of reporting late on suspicious accounts and fund transfer saved CBA from being fined at least AUD 1 trillion, something that was seen totally impractical as the theoretical amount far exceeded the total valuation of Commonwealth Bank.

Greater Scrutiny for AML Compliance

This example of negligence on part of CBA and the huge fine that the bank has been made to pay has alarmed rest of the banking sector. AUSTRAC has issued a fresh regulatory advisory to banks across Australia to adopt much more vigilant and smart systems to weed out suspicious activities and money laundering.

Shufti Pro seems to fill the void for banking institutions of Australia who want to safeguard themself from huge penalties as CBA has been made to pay. Shufti Pro is an Artificial Intelligence powered end-to-end verification SaaS product that offers both Digital KYC as well as AML Compliance services to its clients. Shufti Pro has recently launched its services in APAC region enabling businesses to verify identity and credential of users from every part of the world and every language of the world.

For AML Compliance and Customer Due Diligence, Shufti Pro has compiled a large data bank that contains profiles and names of individuals, business entities and enterprises that have been red flagged by national, regional and international financial watchdogs and Law enforcement agencies. The huge data bank of Shufti pro is compiled from 1000 Watch Lists, Sanction Lists, Politically Exposed Persons (PEPs) and 3000 databases maintained by leading financial watchdogs. The list is updated every 14 minutes to keep the entire record up to date and so that background checks performed for AML Compliance are full proof.

Going forward, there is hardly any better option than Shufti Pro for banks of Australia to perform robust background checks in order to ensure AML Compliance and avoid multi million dollar regulatory fines.

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KYC Services and AML Compliance Services for Forex Industry

KYC Services and AML Compliance Services for Forex Industry

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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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Challenges of AML Compliance under FinCEN

Challenges of AML Compliance under FinCEN

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AML Compliance for US based Cryptocurrency companies has been tightened by Financial Crimes Enforcement Network (FinCEN) in recent years. This tightening of regulations is mainly owed to the fact that cryptocurrencies like Bitcoin and Ethereum are being used at a much larger scale in modern days for transactions and paying for services. This increased usage of cryptocurrencies has made the regulator, working under US Treasury, to tighten its grips on cryptocurrency companies to monitor that the blockchain tokens are not being used for money laundering activities or for funding terror activities.

What are the responsibilities of FinCEN?

FinCEN was established back in 1990 and is tasked with monitoring of financial transactions in order to combat domestic and international money laundering, terror financing and other financial crimes. The strength of FinCEN lies in the fact that it can gather information from federal, state and local authorities to cross-check the transactions performed by individuals and businesses.

Why FinCEN is becoming more vigilant?

Blockchain technology is a fully secure technology that is host to most of the cryptocurrency platforms. Online Wallets are being used to store cryptocurrencies and the owner of the wallet can easily transfer this currency to another person’s wallet. Far from the domain of conventional banking, cryptocurrencies is not only secure but is mostly anonymous as well.  All you need is the access key to online wallets and you can easily transact cryptocurrency.

Not only the anonymous transactions became a matter of concern for FinCEN but the various cryptocurrency exchanges and companies offering real world currencies in exchange for crypto tokens also attracted attention from US regulator. FinCEN cannot target individual users due to the layer of anonymity covering the entire blockchain technology. But they want cryptocurrency exchanges and companies offering real world monetary transactions against these tokens to be compliant to their regulations.

How does FinCEN deals with Cryptocurrency?

FinCEN provided a well-defined outline of AML Compliance and entire transaction cycle of cryptocurrency was also explained in 2013 by financial regulator.  Each participant was defined as “user,” “exchanger,” and “administrator.” According to FinCEN, a “user” is a person who actually purchases virtual currency. An “exchanger” is a business entity involved in exchange of virtual currency for real currency, funds, or other virtual currency. An “administrator” is defined as a business entity that is issuing a virtual currency and who has the authority to redeem such virtual currency.

According to these new guidelines, FinCEN declared that an administrator or exchanger that becomes a medium for transaction of cryptocurrency will be treated as a money transmitter making them liable to FinCEN’s money service business regulations. By bestowing the status of Money Service Business, otherwise known as MSB, FinCEN made it mandatory for “exchangers” and “administrators” to comply with their AML Compliance practices and also brought them under the regulatory scrutiny of OFAC.

These above stated definitions were further refined in 2014 when FinCEN declared that:

“a person is an exchanger and a money transmitter if the person accepts convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.”

These upgraded definitions and status of MSB made virtual currency businesses and entities to adopt AML Compliant programs. Several enforcement actions have already been taken by FinCEN against businesses that didn’t take these new guidelines seriously or maintained that they don’t strictly follow a MSB business model.

AML Compliance for FinCEN

Shufti Pro is an end-to-end verification SAAS product that has provided AML Compliance services to various cryptocurrency businesses. Thorough background checks are conducted by Artificial Intelligence of Shufti Pro not only against sanction list of OFAC and UN but against 1000 Watchlists and 3000 databases. Gigantic databank of Shufti Pro is updated every 14 minutes so that the list of names/suspicious users is up to date and our virtual currency customers are given full value for their money. There is probably no better and more cost effective way to reduce the risk of regulatory penalties except for AML Solutions offered by Shufti Pro.

Reaching to a global clientele is essential for a successful ICO but the strong regulations of FinCEN demand that each member of ICO is fully vetted to ensure transparency. Shufti Pro enable cryptocurrency businesses and exchanges to adopt a global prospective as it can verify the identity and perform background checks for individuals belonging to every country of the world. Documents can be verified in every language of the world to ensure the identity and personal details of potential investors, offsetting the risks of monetary fines from FinCEN on crypto-enthusiasts.

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