AML Compliance- To Put a Halt On Money Laundering

According to the FATF  report,  in 2009, criminal proceeds amounted to 3.6% of global GDP, with 2.7%  (or USD 1.6 trillion) being laundered.    The end goal of criminals is to yield profit in the form of cash- the black money. Then seek ways to launder that money black money through various channels for various purposes. Money laundering is an offense in its own right and it is related to other forms of heinous crimes such as financing of terrorism. Professional money launderers perform it on behalf of others as their core business. The scale of Money laundering is significant. According to the United Nations, Office on Drugs and Crime (UNODC) estimate 2 to 5% of global GDP is launched each year which is between EUR 715 to 1.87 trillion every year. Most organized crime shares a common denominator that is the “financial motive”. Different money laundering schemes are utilized by criminals to boost their assets and then inject them into the legal economy. Tracing these assets means tracing the networks.

Why digital KYC and AML is more Important than Ever?

Over the last five years, criminals saw that the channels into the financial system were being rapidly digitized. They could do more with less by fooling technology, and money laundering was moving from being cumbersome to becoming diverse and difficult to trace. This called for a quick and upgraded method to track money flow as it became impossible to rely on the ‘eyeball method’ to know suspicious acts. This is where digital KYC and AML Compliance solutions jumped in. AML is actual an inherent of KYC (know your customer) solutions that are to identify the customer business is dealing with. This is really crucial as if a business has a true identity of a client it becomes much more easy to track if any fraudulent activity is being carried out by him. So here are 3 reasons why AI-driven AML and KYC solutions are crucial for a burgeoning business:

Trade-based Money Laundering

Economies are export-oriented so trade-based money laundering, using trade instruments like fraudulent credits, fake invoices, vessel re-routing to pick up illegal goods, so as to mask movements of money is of great concern. The use of artificial intelligence to find outliers when looking at dual-use goods monitoring, price monitoring, vessel tracking, as well as trading partner screening, will be a pivotal area of focus and development.

Digital KYC

New technologies are being developed to tackle eKYC (different from the standard KYC) so that online-only businesses can onboard customers in a way that is accurate and convenient. This is driving innovation and interest in new forms of ID and biometric verification. Cracking this challenge will be especially important for business with the huge and pervasive use of mobile and digital.

AI in AML

AI has been a long-discussed topic, there is a race among lenders to tangibly apply it and operationalize it. The implementation uses AI to explain regulators and others why certain cases were flagged or perhaps missed. Artificial intelligence and its great value as AI-based KYC and AML will come in reducing the number of false positives and ensuring better detection of financial crime as the data sets grow and become more complex. AI-based Saas products are used for KYC and AML to make the whole process seamless and swift which is otherwise a cumbersome process. 

So, it can be concluded that digital AML checks play a vital role to lower down the increasing cased of fraudulent activities, to mitigate the risk of digital scams and most important all to combat money laundering. Digital AML and KYC solutions are a must for any business in the present era.

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