AML Screening in the light of Compliance Regimes Around the Globe

AML Screening in the light of Compliance Regimes Around the Globe

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

China:

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

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

The United Kingdom:

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

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

The United States of America:

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

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

Canada:

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

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

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

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

Shufti 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.

AML Screening

AML Screening – How it might infiltrate Your Business

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.

Placement

It is the physical placement of money, for instance, in a bank, casino, local or international shop or bureau de change (currency exchange). Here are a few ways money launderers operate;

  • Smuggling Currency – Physical movement of currency or financial instrument such as bonds across the border
  • An Accomplice Bank – A 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

Layering

The launderers try to hide the money under different layers. There are two major ways they do it;

  • 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.

Integration

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.

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.

AML Compliance

Billion Dollar AML Compliance Plan for the Financial Sector

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.

 

Shufti Pro partner With Flexentral

Flexentral joins hands with Shufti Pro for KYC & AML

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

info@shuftipro.com

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.

AML Compliance For Banks

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

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.

Fintech AML Compliance

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

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.

AML Directive Shufti Pro

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

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.

Conclusion

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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