AML Compliance and Banks – Stabilising the financial market

It is a stabbing reality that a vicious crime like money laundering has been increasing over the past few decades, making it a global issue. It is considered a white-collar crime since most money laundering criminals belong to high official ranks and are PEP(Politically Exposed People), which may be the reason why they are walking freely without facing any jurisdiction. AML Solutions was formed to help institutions in stabilizing the financial market by stopping criminals from legitimizing dirty money.

What is Money Laundering?

Simply put, money laundering is an activity that hides the money obtained through illegal activities and makes it appear legally earned. Trade-based money laundering is done through the import and export of goods while hiding their origins. Virtual money-based money laundering is mostly done through cryptocurrency. Criminals slip through the cracks in the system and carry out their illegal activities without coming under the radar. Drug Trafficking based money laundering is carried through the dark web, where illegal drug dealers hide their origins, identities and launder money. In Terrorist funding-based money laundering, terrorist organizations disguise their actual identity and clean the money without coming to notice by finding loopholes in the financial institutes and taking advantage of that. There are many different types of auto crypto trading bots on the market. They all have their pros and cons, so it’s important to find best one like bitcoin era that suits your needs best.

3 steps of money laundering

Money laundering is done through three steps; placement, layering, and integration.

1. Placement; placing the money in the financial institutes
2. Layering; layering the money with many transactions and masking its real identity
3. Integration; withdrawing that money and successfully changing it into ‘clean money’

AML Compliance and its objectives

The primary objective behind Anti Money Laundering is making certain that money in the flow is legal, earned through the right resources, and is being used for the system allowed purposes. Before diving deep into the topic, let’s first figure out what AML security is.

Defining Anti Money Laundering

A policy that asks the financial institute to screen their customers, check their transactions and report any criminal activities noticed. AML Systems ensure that no person is hiding away the money earned through illicit means and making it appear legal.

Why did the AML Solutions come into being?

The arrival of money laundering as an internationally prevalent issue was a rude awakening for the financial market. To control this, many concerned organizations tried to fight their way and plan a legislature system that would help in stopping the legalization of criminal activities. 2019 was the most active year in this regard. For the safe process of banking transactions, an AML solution was necessary to battle with such illegitimate exercises. Before AML Securing, Financial Action Task Forces(FATF) worked on building a plan that countries can follow to fight against money laundering. At the present moment, 27 countries are in it. With the sole purpose of stabilizing the international financial system, International Monetary Fund(IMF) is also working on money laundering crimes and terrorism funding acts. All these efforts aim to build a system where criminals don’t continue engaging in illegal activities, all while sitting under our noses.

AML Compliance and Banking

AML is the most important thing in banking. Why? Because banks deal with money transactions and are the main spotlight for these criminal activities. The reputation of a bank stands on following and properly providing the services that incorporate the regulations of anti-money laundering.

AML Monitoring helps in Stabilizing the financial market

Min Zhu, the deputy managing director of IMF, has said, “Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse.” The money involved in money laundering is mostly earned through illegal drugs selling, human trafficking, corruption, smuggling and is often used in funding terrorism. Accurately following the AML compliance in financial institutes and understanding its importance in business will promote a stable and strong financial market.

Artificial Intelligence in AML Verification

The evolution of the digital era and the increase in cybercrimes has created loopholes in the AML compliance that was once considered absolute. The addition of AI in the form of AML screening can screen out the AML sanctioned list of people. The fully-automated system can extract the individual’s personally identifiable information from their government-issued ID documents and check the information against global watchlists, sanctions, and PEPs in real-time. In this way, suspicious people can be detected and identified within a few seconds, promoting risk-free business and banking.