Money mules use illicit ways and means to launder dirty money from illegitimate sources to use it for their own benefits. Money laundering, in all parts of the world, is treated as a serious financial crime and has strict penalties and prosecutions against the offender. Small businesses, who are in dire need of money, are often faced with potential fraudsters who tend to provide them with certain opportunities in turn of laundering money from their platforms. A PwC survey shows the total sum of money laundering transactions across the globe makes up almost US $2 trillion yearly which is 5% of the global GDP rate. AML solutions provide an all-in-one defense mechanism against these activities by monitoring and regulating financial operations.
What Exactly is Money Laundering?
Money laundering refers to all such activities which are intended to clean dirty money acquired from false ways and means to show it was obtained from legal sources, which in fact is not the case. Money laundering is often carried out in the following three stages:
Placement
This is the initial phase during which the criminal acquires illegal money and places it into the legal financial system or deposits in a bank or e-wallet etc.
Layering
In this part, the money launderer uses complex mechanisms such as book-keeping and circling the money through different channels to hide its origin. This way the true identity of the source is masked.
Integration
The final stage is integration where the clever fraudster takes all the credit. At this stage, the money is already clean, in a legitimate banking system and ready to withdraw, as like any other normal transaction through the bank.
What is an AML solution?
The best practice for a business to safeguard itself from money laundering is by investing in Anti Money Laundering (AML) practices and guidelines. There are some good service providers in the market which offer competitive AML solutions to defend against potential criminals and protect your customer’s identity. In 1989, when the Financial Action Task Force (FATF) came into being, AML compliance was introduced for the first time. AML solutions are purpose-built for monitoring any suspicious financial transaction in the banking system and reporting it on an immediate basis to deter possible loss.
AML Transaction Monitoring
Banks and financial institutions are at a bigger risk of money laundering since they involve a large number of monetary operations on a daily basis. Anti Money Laundering (AML) transaction monitoring allows banks to standardize customer transactions and keep a vigilant eye on them. This is possible by integrating an AML software in the banking system which conforms to all compliance obligations chartered by financial regulatory authorities like the European Union and FinCen, etc. This AML solution takes into account the personally identifiable information of the customer and their account profile information and performs the further analysis. Based on the indicated risk levels and future predictions, the financial entity takes relevant measures to protect its customer and reputation.
How Does AML Tracking Solutions Work?
AML solutions provide robust techniques to safeguard user identity from getting in the hands of money-laundering criminals. By combining Counter-Terror Financing (CTF) standards and Suspicious Activity Reports (SARs), these AML security solutions meet the requirements of international financial regulations. AML monitoring software comes with a number of takeaways which are listed below:
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It tracks suspicious behavior both at the end-user and financial institute level
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By using automated systems, it reduces unnecessary alerts by properly assessing risk factors and priorities
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System effectiveness is increased since most tasks are regulated
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Better compliance with financial standards and confidence to banking partners and authorities
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Quick, easy-to-implement and safe and secure integrations
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