Anti-money laundering software is a versatile tool; some companies use it for data management purposes, others use it to monitor and flag suspicious financial activities. Read on to learn how it helps companies meet global compliance and key features of AML software.
According to official estimates, up to $2 trillion is laundered through the world’s financial system every year.
Catching money laundering manually is almost impossible. There are simply too many transactions to process. Plus, the patterns used by fraudsters are becoming increasingly difficult to spot. Thankfully, anti-money laundering software can help financial institutions spot suspicious transactions and report them to the relevant authorities.
Anti-money laundering software (usually known simply as AML software) is used by regulated entities such as legal and financial institutions to help them meet their legal requirements.
The software is designed to help spot, prevent, and report money laundering activities. When utilized effectively, AML software facilitates faster and more accurate compliance and investigations.
However, although AML software is incredibly useful, it must be used as part of a wider AML compliance program that reflects that institution’s unique profile.
Regulated entities like banks and financial services providers are required to monitor, investigate, and report transactions of a suspicious nature to the financial intelligence unit in their respective country. If suspicious transactions are not properly investigated and reported, then these businesses face heavy fines and regulatory restrictions.
All types of AML software help institutions implement their AML programs. However, the practical application of AML software is diverse. For example, while some companies use AML software for data management purposes, others use it to monitor and flag suspicious activities.
Generally speaking, there are four different types of software that address the AML requirements of businesses. They are:
Transaction monitoring systems focus on identifying suspicious patterns in transactions. When these transactions are spotted, suspicious activity reports (SARs) can be filed.
Using transaction monitoring software, businesses can effectively monitor the transactions of their customers. By utilizing historical transaction data and the customer’s account information, the business can build a ‘whole picture’ of the customer that can help them identify any suspicious activity.
The identification and reporting of suspicious transactions is part of know your customer (KYC) requirements.
Currency transaction reporting (CTR) systems deal with large cash transaction reporting requirements. In the US, this applies to cash transactions of $10,000 and above. This includes both transactions that include a large amount of cash and multiple small transactions in the same day that reach the limit when added together.
Under the Bank Secrecy Act, transactions of $10,000 or above must be flagged automatically.
Customer identity management systems verify the identity of a customer. They also ensure that the customer is not on any form of negative list, such as a sanctions watch list. They’re an initial and ongoing part of a business’s KYC requirements.
Certain territories maintain ‘black lists’ of high-risk profiles and entities. For example, in the US, financial institutions are prohibited from doing business with anyone on the Specially Designated Nationals List.
With the help of AML software, a financial institution can quickly identify blocked persons. They can then also provide their information to the relevant institution.
Compliance software is used to help firms comply with their AML regulatory requirements. Pieces of AML software like this retain the necessary evidence of compliance. They also record the training of relevant staff members.
In addition to this, compliance software also keeps an audit trail of how compliance officers handled the alerts that were raised against a customer’s activity. Pieces of software like this can also track reports that have been submitted to financial authorities.
Here at Veriff, our AI-powered AML and KYC compliance solution is packed with features that can help you fight financial crime.
You can show regulators that you take financial crime and compliance seriously by deploying our identity verification platform alongside PEP and sanctions checks, adverse media screening, and ongoing monitoring.
Our end-to-end anti-money laundering compliance solution provides a range of benefits, including:
With the help of our software, you can ensure that your customers are exactly who they say they are. With accurate and automated decision-making, our solution stops bad actors from exploiting financial services businesses, crypto companies, and industries of all kinds.
Our solution will also help you comply with relevant regulations. With our software, you can screen users against global PEP and sanctions watch lists. Our list coverage is updated in real-time, so you can have the utmost confidence in your KYC processes.
Just because a potential user/customer isn’t on a watch list doesn’t mean that they don’t pose a threat to your business. This is why we also screen for negative information and news. This way, you can accurately assess the potential AML risk exposure of your customers.
We understand that political and regulatory environments can change incredibly quickly. Thankfully, we provide ongoing monitoring. This means that you can continually screen your customer lists against PEP watch lists, global sanctions lists, and adverse media.
If something changes with any of your existing or previously onboarded customers, you’ll be notified.
We provide regulatory compliance and KYC in a single integration. Developers love our AML software because our end-to-end compliance technology can be integrated seamlessly.
As an added bonus, we also provide industry-leading support and account management. We’re even compliant with CCPA, GDPR, SOC 2 type II, and WCAG Accessibility Guidelines.
To help you learn more about AML software and the benefits it can provide your business, we’ve answered a number of popular customer queries.
The amount your AML software costs will depend on the needs of your business. However, our Starter Plans begin at only $1.49 per verification (with a $49 monthly commitment). The plans we have available reflect the different verification requirements of each business. When you partner with us, you can make sure you’re only ever paying for what you need.
Here at Veriff, we understand that no two businesses are the same. For this reason, when you partner with us, we’ll build the perfect identity verification solution together. Choose our Enterprise Plan and we will work with you to build features and products that will continue to help you and your customers.
Traditionally, AML compliance officers are responsible for overseeing and implementing the AML compliance program of their business. This includes integrating any pieces of AML software into the program.
Since AML compliance officers may be held personally liable for any breaches of the law and could face criminal consequences, it’s incredibly important that they select a piece of software that addresses the needs of their institution in an efficient and effective way.
As mentioned above, the way AML software works depends on the purpose it serves. For example, customer identity management software needs to ingest data from third-party sources, including lists compiled by governments. It should also allow for automated screening and monitoring related to adverse media screening as well as the identification of politically exposed persons (PEPs).
Meanwhile, transaction monitoring software must possess the ability to identify suspicious transactions based on a set of rules. Some solutions also incorporate the use of artificial intelligence to streamline and optimize the transaction monitoring process.
AML software is an integral and indispensable part of an institution’s AML strategy. It’s particularly important because it helps businesses meet their obligations in an increasingly complex regulatory landscape.
In the United States, for example, compliance with the Bank Secrecy Act (1970) involves significant administrative effort, including a rigorous external audit process and numerous reporting obligations.
Due to the complexities of this legislation and the requirements it places on businesses, vast amounts of data must be prepared, processed, and analyzed. This is beyond the ability of an AML officer, who could not properly and accurately monitor everything without help. However, AML software has the ability to process records in an instant. Plus, as well as ensuring efficiency and accuracy, it can also filter relevant information to AML officers and assist them with their reporting obligations.
Know your customer (KYC) is a specific part of AML. It refers specifically to the means by which firms establish and verify their customers’ identities and monitor their financial behavior.
Typically, the KYC process involves collecting and verifying the following pieces of customer information:
However, depending on the purposes of your business and the legislation you need to adhere to, you may also need to monitor ongoing transactions and screen your customers.
AML software that verifies the identity of your customers and monitors their activity and behavior on an ongoing basis should ensure that you know your customer.
By taking a proactive approach to KYC and ensuring you perpetually monitor customers and make sure that they haven’t been added to any watch lists or sanctions lists, you can accurately evaluate the level of financial crime risk your business incurs. This applies at the onboarding stage and any other stage of the client’s lifecycle.
Interested in learning more about how our AML and KYC compliance solution can help your business meet its AML obligations? Book a consultation with Veriff today. We’d love to provide you with a personalized demo that shows exactly what we can do for your business.
Our solution can help you fight financial fraud and can help you show regulators that you take financial crime and compliance seriously.