Increasing Rate Of Financial Crimes And AML Solutions - Magzinenow

Increasing Rate of Financial Crimes and AML Solutions

Corruption is getting more common and increasing rapidly with legal authorities and businesses worldwide with every passing day. Money launderers keep them update with new technologies and try to implement new techniques to the dart banks and other businesses. It becomes normal for money launderers to bypass banks’ security. Facing such situations businesses have to implement all the required policies and AML systems to protect themselves from such illicit activities. As per PwC’s survey, the transactions of the laundered money are roughly about 5% of the world’s GDP which is approximately $1 trillion to $2 trillion annually.

Money Laundering

The concept of money laundering is revolved around the transfer of funds that are obtained from any illicit activities or criminal ways to show this money in a legal and clean way, and earned through authentic sources. 

Placement, layering, and integration are the three steps involved in money laundering.

Placement: Money laundering starts by converting the dirty income into authentic and valid legitimate sources. it can be transferred into bank accounts or other legitimate instruments. This step is insecure for the fraudsters because they have to transfer a large amount of money into banks or other financial systems directly.

  • Generating false recipients 
  • Accounts opening out of the country
  • Transferring a small amount of money

Layering: After the completion of the first step, the second stage includes the transfer of smaller amounts by breaking down the huge bulk of funds. The process of smaller transactions is done because the small amount transfer is not alarming according to the anti money laundering regulations. It is difficult for anti money laundering officials to detect.

  • International trading
  • Buying money orders from any other country
  • Selling and purchasing in foreign currency 
  • Buying and selling of luxury goods
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Integration: In the final stage of money laundering, funds are transferred into legitimate accounts of criminals. This also includes the smaller transactions. They can use such techniques like: 

  • Approving loans to the shell companies
  • Distributing dividends to criminal-controlled companies’ shareholders. 

Money Laundering Risks for Small Businesses

Small businesses are normally victimized by money launderers. Due to the lack of knowledge and experience, small business owners have about the risks involved with an individual business deal, criminals target small businesses. Moreover, small businesses do not aware of and allocation of resources for anti money laundering. 

What does Anti Money Laundering Mean? 

Anti Money Laundering is a process that is essential for the elimination of such transactions that convert illegally generated money into clean and legitimate income. Though companies need to oblige rules. It does not mean that shareholders are also obliged to the AML compliance laws. This is because customer due diligence is important for the customers because they are not with the anti money laundering regulations set by the government. 

As most AML solutions were deployed for traditional banking organizations, AML laws have lagged behind cybercrimes in the past. However, as a result of the digital transition, the FATF and other regulatory bodies started to concentrate on digital transactions and create strict restrictions to prevent money laundering through digital platforms.

AML Solutions for Businesses

AML compliance is very helpful for small businesses, here are some points:

Cost Effective

AML solutions have a fixed amount they charge for the license and setup, these are some main issues for small businesses. Previously small businesses were unprotected from monetary crimes. There are plenty of platforms are out there that offer affordable options by sparing small firms from fixed expenses. 

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Risk Protection

Small organizations’ main goal is to focus on clients’ experiences. They are trying to place customers’ experiences on top of the list. AML solutions make your compliance process easier and allow you to perform digital onboarding and transaction screening. 

Key Elements of AML Solutions

A persistent and substantial risk is posed by phishing and other illegal access to businesses. Digital onboarding and continuous AML verification must be combined by digital banks and other financial organizations. All-digital banks should create internal AML compliance systems, according to the FATF.

Concluding Remarks

It can be serious for small businesses to involve in money laundering. Furthermore, you will be charged with a criminal offense and fined heavily. Involvement in money laundering whether you want to or not will affect on brand’s reputation. Small businesses and organizations should keep this in mind and ensure compliance with AML regulations by studying them. AML solutions are able to stop money laundering future.


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