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Financial Services

The global AML landscape is diverse and financial services must keep pace with developing rules and regulations in order to meet their compliance obligations.
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Why Financial Institutions Need AML/CTF?

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Financial institutions are a high-risk industry because they provide many routes for financial transactions from local credit unions to worldwide banks. You are considered a "regulated entity" as a registered bank, trust company, brokerage firm, or investment dealer if you:

Are involved in financial and monetary operations including loans, deposits, investments, and currency exchanges

Are a provider of a superannuation find or manager, or an investment service provider

Risk exposure

Without knowledge of their commercial activities, sources of finances, transaction purpose, or invoicing of goods, banks and other financial institutions conduct business with other people and/or companies. This permits the laundering of criminal proceeds through a variety of means, putting financial institutions at risk of money laundering (ML). Transactions with sanctioned persons or governments may expose financial institutions to terrorism financing (TF), thereby exposing them to costly lawsuits and regulatory fines.
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Compliance Measures

The process of compliance starts with necessary client verification (KYC) as well as screening for sanctions, PEP, beneficial ownership, and adverse media when onboarding a client or another entity. Financial institutions are additionally mandated to monitor, track and report any unusual activities. This includes suspicious transactions, tax evasion, the act of manipulating the market, transactions with sanctioned corporations or nations, as well as trading in illegal goods.

Gaps in Compliance

The ability of illegal funds to be laundered occurs since large sums of cash can be transacted and can obscure relevant sources of funds as well as ownership. This often means that the profits of financial crime within a foreign country can be merged within the economy of another. As a result, through several layered transactions, or fraudulent invoicing techniques, terrorist activities can be financed. This makes financial institutions extremely susceptible to AML/CTF compliance violations and subject to penalties.
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Establish Compliance

It is expected for banks, trust companies, brokerage, or investment firms to establish risk-based compliance program framework. They are further expected to:
  • Perform a risk-based analysis of exposure by client type, business relationship, third-party engagement, country of operation, transaction size and industry (which includes money transfer services, or cryptocurrency).
  • Develop strategies and controls to reduce and mitigate risks.
  • Create an AML/CTF programme, including client identification, ongoing monitoring, and reporting, that is in accordance with the rules of the industry body.
  • Establish a risk-based methodology for the continuous monitoring of consumers, transactions, and business relationships. This includes mitigating risk in all types of business interactions
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Maintain your Compliance Program

As per the regulations of your regulatory body, it is necessary to establish and maintain your compliance program. Penalties for non-compliance may be monetary or criminal in nature.

Constant compliance entails:
  • Selecting a compliance officer, conducting background checks on potential employees, educating staff members on the hazards involved, and keeping them informed of AML/CTF regulations.
  • Carrying out enhanced due diligence (EDD) when signing up for cash-out/cash-in bets, a credit extension, significant cash transactions, or complicated transactions.
  • Constant transaction monitoring for irregularities, overseas transactions, deals with prohibited parties, or when sizable transactions are accompanied by little betting activity.
  • Collecting client information from all touchpoints and keeping records.
  • Submitting compliance reports, suspicious transaction reports (STRs), and other duties as specified by a relevant regulator.
  • Periodically reviewing your risk assessments and compliance programme with outside audits.
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