Anti Money Laundering Policies: an Essential for Businesses


Financial crimes like money laundering, corruption and tax evasion are not new to the business and political sector. The ways to launder money have evolved over the years, however. The digital nature lent to transactions has made it a challenging task to catch perpetrators of such financial crimes. The need for a smart and efficient anti money laundering process has consequently surged as well. 

It is not just the crime of money laundering and corruption that is worrisome. It is the fact that a lot of the times the laundered money is used to fund terrorist factions and outfits. The global regulatory authority, Financial Action Task Force (FATF) was created in this vein as well. Over the years FATF has identified countries that do not have effective money laundering laws in place and placed them under a watchlist. 
This has prompted a lot of countries to develop and enforce sound legislation on money laundering as well. This should also serve as a reminder to businesses and financial institutes to regulate their transactions and investments. 

Why is AML Essential for Businesses?

Money laundering and other financial crimes are, for the most part, carried out through banks and financial institutions. To curb such activity it is important that a proper anti money laundering process is initiated for them to improve their business practices. A worthwhile AML compliance system can lead the financial sector towards developing safer and reliable business practices.

However, it is not just financial companies that need to watch out for money laundering. Any startup or company looking to fund its business through an IPO, ICO or an STO has to beware of fraudulent investors and scam artists. An effective AML process can help them vet all potential investors for financial vulnerabilities.

The most motivating factor by far for businesses or financial institutes is the monetary fines imposed on them for not complying with anti money laundering regulations. In an attempt to regulate businesses and clamp down on money laundering activities, a lot of countries have now forced heavy pecuniary penalties upon local banks and financial institutes. This alone has caused companies to scramble to comply with such regulations.

How can a Company adopt AML Compliance?

The major concern for businesses and banks is that most of the anti money laundering processes available are costly and ineffective. More recently, however, a number of Know Your Customer or KYC service providers have also introduced AML compliance checks. They basically perform a background check of a person through a vast databank they keep of various watchlists issued by institutes like FATF and FINMA. Whenever a new or existing customer enters a list, the bank or company is alerted to their exposed status and are thence advised not to take them on. Such service providers update their lists regularly and any new person(s) entering - or exiting - it is updated almost instantly. Such procedures are simple as well as cost effective too.

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