Laundering money is a grave offense. Criminals use different methods to legalize money they have obtained in criminal activities like drug trafficking or corruption. AML, anti-money laundering is compliance, regulated by global authorities, to control money laundering activities. With the customer due diligence and on-going monitoring, we can discover the risks related to a potential customer.
But what about the businesses? Money laundering is not just limited to the people, even some businesses are involved with these activities. Hence it has become an utmost priority to have AML for businesses. Let us discuss in this blog how we can help businesses from getting involved in the money-laundering activity.
Money Laundering and Businesses
Businesses, especially small businesses, can become a victim of money laundering activities. What criminals do for laundering money is that they have shell companies. Companies that exist only on paper and not, in reality, are shell companies. They use these companies as a front business to cover the original source of the money. When other businesses or even the banking industry deal with these companies, they automatically become involved with money laundering activity even if not intentionally.
Sometimes the employees or even shareholders of some company are involved in money laundering activity. Doing business with them might affect your own business’s repute.
The fines for getting involved in money laundering activity are around $50,000 or the amount is doubled the worth of property involved. On top of that, there is also imprisonment of 20 years. This is according to the International Comparative Legal Guide.
History of Anti-Money Laundering
To fight the money laundering activities, global regulatory bodies made regulations. In 1970, the Bank Secrecy Act was passed that required all the businesses and banking industry to identify all their customers before doing business with them. In 1989, FATF was made with the sole purpose to fight money laundering endeavors. These laws were further made stringent after the 9/11 attack in 2001. The US Patriot Act was passed to stop money laundering activities and counter-terrorist financing.
Anti-money Laundering Solution
The global regulatory bodies have sanction lists of people or businesses involved in the money laundering activity. The businesses required to verify their customers or even the businesses they are dealing with and then screen them with those lists to see whether they were involved in laundering money or not.
However, this is such a lengthy process that may take days to verify the identity let alone screening with the watchlist. This is why there is automated AI-based software that can perform AML for businesses within seconds.
This is how the AI-based solution has helped businesses in AML regulations:
- Enhanced due diligence
This process identifies who you are dealing with. It involves the identification and verification of the businesses and their main employees or owners. The AI-based solution can verify the authenticity of the business or the identity of the owner within seconds.
- Screening
This AI-based solution can screen the businesses with the global watchlists provided by regulatory bodies or even screen it against adverse media within seconds. This way you can ensure that the business you are about to get involved with is clean and you are not facing any risk of money laundering reputation.
- On-going monitoring
In this procedure, the businesses are being monitored constantly to check for any fraudulent activity or money laundering activity. If the business or their employees get involved in money laundering activity the AI-based system will alert you about the risk you might get involved with.
- Odd Patterns analysis
At times, the launderers use different accounts to make transactions to avoid unnecessary attention. This is the type of thing the human eye cannot detect but AI-based AML for a business solution can analyze this odd pattern of transactions and alert the system.