Money laundering isn’t something that is only reserved for gangster movies and Breaking Bad. It is a serious criminal activity that not only remains prevalent but is becoming increasingly sophisticated.
You only have to look at the statistics. Research suggests that globally an estimated 2-5% of global GDP is laundered each year. That equates to around $2 trillion US dollars.
In the battle to prevent criminals from taking their illegal money and disguising it as legitimate profits, anti-money laundering (AML) regulations are used.
The problem is regulations continually change to keep up with money laundering trends. Add in these rules can fluctuate based on country or even region and AML compliance becomes a complex challenge.
Yet as a business owner it’s a challenge you have to overcome. To help make that a reality, here are four tips to remain AML compliant.
Tip #1: Perform a risk assessment
Performing a risk assessment is necessary to get off on the right foot with your AML program. What will this risk assessment achieve? It is done to identify the risk categories present in your company. Products, services, locations – all of these can present the opportunity for criminal activities
Once you have identified relevant categories, it’s time to take a deep dive into the available data. You’ll want to assess transaction data to see if any red flags exist. All risk profiles will also require updating regularly. This is necessary because the business world moves fast, and updates prevent anything suspect slipping through the net.
Tip #2: Incorporate strong internal systems
Internal controls are an important element in the battle against money laundering. These controls are able to spot and report suspicious activity and any possible irregularities.
As for the policies used for your internal systems, they should supply guidance for ongoing process evaluation, meticulous record keeping, and transaction monitoring. Additionally, incorporating know your customer (KYC) processes – including diligent research on new prospects prior to any relationships – is recommended.
With strong internal systems, this minimizes the chances of working with clients that are involved with money laundering.
Tip #3: Make use of specialist compliance software
When you use specialist software to ensure AML compliance, you effectively gain a strong backbone for your entire procedure. This software is designed as an end-to-end solution for AML compliance, ensuring you are able to fulfil all regulatory obligations – as well as limit the risk of money laundering during the customer journey.
With continual updates, this software helps to make life a lot easier with the ever-changing world of AML regulations.
Tip #4: Provide employee training
It’s not just you who has to be aware of AML compliances. It’s something that needs to be driven throughout your organization. Each employee plays a role in upholding AML rules and preventing money laundering from occurring.
Due to this, it’s important you provide employees with AML training. This should be done on a regular basis to stay on top of the latest regulation developments.