Money laundering is a financial crime all around the world, and some countries like the UK, USA, Canada, and Europe are rigid about it. They don’t allow companies and organisations that are involved in any type of money laundering, terrorist financing, tax evasion, illegitimate funding, or other illegal financing to run their businesses. KYC and AML regulatory also fined them for not following the financial compliance as per the industry.
Some current stats that shed light on its impact globally:
- Between $800 billion and $2 trillion is the projected yearly sum of globally laundered money, constituting approximately 2–5% of the world’s gross domestic product (GDP).
- Under the influence of illicit substances: Solely from drug trafficking, an annual influx of laundered cash reaches up to $500 billion. Other substantial contributors to this illicit financial activity encompass corruption, tax evasion, and organised crime.
- Wide Disparities Across Regions: The primary occurrence of money laundering is observed in developed economies, with notable challenges faced by the United States, the United Kingdom, and China. Nevertheless, there is a growing trend towards targeting developing countries for such illicit financial activities.
How do AML solutions help combat financial crimes?
In the digital world, identity verification ensures whether the identity is true or not. Banks, financial institutions, fintech, insurance, and cryptocurrency are the financial sectors where everyone performs KYC to onboard a new client into the business. Clients that are at high risk perform AML verification to check the background of the client for involvement in any illegal activities. During the AML verification, identities are also verified through various adverse media, sanctions, and the PEP list. If anyone fails during the KYC and AML verification, then it will reflect the suspicious activity involved by the client. The AML solution gives a complete report of the illegal involvement, which helps to mitigate the business risk based on involvement in financial crimes. Therefore, AML solutions assist in combating money launderers and financial criminals in the digital landscape for businesses.
There are other ways in which AML solutions help businesses worldwide.
Fast client onboarding: Banks, financial institutions, fintech, insurance, and trading are the few sectors where client onboarding is frequent, and AML services providers help with an API to authenticate identities and onboard them quickly and securely. In the fast-forwarding world, even some businesses also check the background of the customer and onboard them quickly for business transactions. That is the biggest reason why AML solutions are essential for financial and non-financial businesses.
Stay compliant: Financial regulations vary according to the countries in the business world. KYC and AML solutions are the keys to staying compliant and preventing the regulator’s heavy fines.
Prevent Financial Fraud: The AML solution provider helps to recognise the identities that are associated with financial crimes and evaluate the business risk. Companies and organisations that partner with the AML verification system can evaluate the business risk for the new client before onboarding them and help prevent financial fraud. AML verification completes the surety of a genuine client on the basis of the verification report and secures business with a suitable client base.
Enhance security: AML solutions also provide a shield of protection from the risk profile and financial criminals that are trying to implement fraud by using fraudulent identities. Therefore, the AML solution helps to enhance the security system for the business so that it doesn’t allow unauthorised identities to access sensitive information and recognises fraudulent identities.
Secure Business: Businesses depend on a suitable client base that is not involved in any financial crimes. AML solutions ensure the right clients for the business and prevent financial crimes. So, it is essential to have an identity verification system that provides complete background information about the business client and keeps the business secure.
Conclusion:
AML solutions are more than just identity verification tools; they also help to evaluate business risks and protect businesses from fraudsters in the digital world. To stay away from the curve, choose an AML services provider and authenticate business identities securely and accurately before onboarding them. AML solutions help financial companies make the business decision whether to do business with a new client or not. Therefore, enhance the security of the business, stay competitive, improve the client onboarding process, build trust, and improve reputation in the competitive world by implementing robust identity verification solutions today.
