If you are in an important position at a bank, a brokerage firm, or a similar financial institution then you are probably already aware of the definition of KYC and AML. However, if you currently have concerns about the effectiveness of your AML and KYC processes, then you may be keen to find out more about these vital procedures. After all, in the world of banking and money lending, there is significant potential for fraud and criminal activity, and the safety of both your customers and your institution relies on a rigorous verification process.
Fortunately, there are a number of things you can do to boost the efficacy of your AML procedures. In order to help your institution effectively screen customers and prevent money laundering, you are sure to benefit from these 5 useful tools in particular.
We have already mentioned KYC – or Know Your Customer – and for good reason, as this should always be the first port of call when it comes to conducting AML checks. This is the first level of protection against criminal activity and should provide a clear early warning signal if you are dealing with someone who is trying to impersonate another customer to launder money, as they will be unable to provide you with the correct information you have for “their” file.
Introduce PEP scans – and sanctions
PEP scans are another important tool for uncovering customers that may be demonstrating suspicious financial behaviours. It’s recommended that all of your customers are scanned on a regular basis; for example, every three months or so. PEP scans involve looking out for any suspicious behaviour – whether it’s a transaction or the opening of an account- and monitoring the person doing the action and the sender and receiver of the money. If anything seems amiss, a sanction can be placed on the customer and they can be removed from your client base in order to protect your institution.
Employ the latest tech to help you
Technology is becoming more complex and more effective all the time, and that includes the field of AML. The best money laundering books suggest using cutting-edge digital tools and scanning processes will enable you to carry out your customer monitoring, perform scans, and award sanctions in seconds. This way, you have fast results and can act accordingly if there are any signs of foul play.
Use a risk-based approach
Working in a financial institution, you are most likely already aware that the risk-based approach to AML controls has been a vital part of the procedure for the last ten years. According to authors such as Kevin Sullivan, under this approach, customers are given a grade of either low-risk or high-risk, and they are checked accordingly, so as not to waste precious time and resources.
Well-trained staff can make all the difference
When it comes to enacting your AML policy, it is vital that all of your staff are on board and have received appropriate training. This will help them spot the signs of potential money laundering and other financial crimes. It’s vital that they understand the different methods that can be used to launder money, not to mention the various checks they may need to carry out. They should also know how to report any activity they find to be suspicious.