In the last decade, we have seen brick and mortar businesses transition their operations online to remain accessible and profitable, and this spiked during the Covid-19 pandemic. But this shift has its share of challenges like adaptation, security, and money laundering. For one, adapting to the new online business processes like automated ID checks, online customer relationships, and virtual payment procedures, is not a walk in the park. Further, ensuring safety of your platform and customers’ funds or assets is no little hurdle to jump.
Regardless, it’s worthy to note that advancements in technology have helped most businesses increase their customer base and boost security. But keep in mind that cybercriminals also get increasingly sophisticated and seek loopholes to carry out acts like money laundering. Online businesses are susceptible to cybercrimes and breaches like identity theft, internet scamming, ransomware attacks, financial data theft, cyber-extortion, and phishing scams.
Unbeknownst to most business owners, not only financial institutions are vulnerable to these attacks. All businesses, regardless of size or industry, are. Therefore, anti-money laundering processes are needed to protect businesses from these criminals. Anti-money laundering (AML) processes include regulations and policies that prevent and identify fraud, suspicious activities, financial crimes and money laundering risks. This article will discuss some AML tips to help you protect your business online.
- Risk Assessment of Business and Platform
The first step is to carry out a comprehensive assessment to identify the risk exposure of your business and platform. Assessment of products, customers, customer’s access locations, and transactions, helps in the implementation of better KYC and AML processes. You should also evaluate the compliance, legal and regulatory requirements within your industry to ensure adherence.
Consequently, businesses need to develop, implement, and monitor anti-money laundering risk controls, which include policies designed to mitigate money laundering risk and support AML regulatory compliance. This risk-based assessment process enables you to focus the majority of your resources where the risks are highest.
- Abidance and Keeping Up to Date with AML Regulations
Proper abidance to anti-money laundering regulations should be a top priority to avoid fines and penalties. However, numerous AML compliance laws, like the Bank Secrecy Act, the PATRIOT Act, and the Money Laundering Control Act, differ by location, industry, or business specifics, and you need to be familiar with regulations that apply to you.
Developing AML compliance policies tailored to your business and industry is critical, as these are the instructions to follow for easier detection and prevention of money laundering schemes and other criminal activities. It is also important to educate staff on AML regulations and policies. This way, they can detect suspicious activities on your platform and report to the compliance or AML/KYC department.
Information about documentation and monitoring procedures; suspicious activity detection, prevention, and reporting plans; recurring internal reviews; anti-retaliation strategies; personnel training, and compliance policy independent review should also be addressed in the AML compliance policy.
While complying with AML regulations you should endeavor to carry out customer due diligence, suspicious activity reporting, and adopt customer identification programs. This ensures your company is able to generate reports on any red flags and detect potential money laundering schemes with ease.
- Integrating KYC Solutions to Platform
A KYC solution enables businesses to authenticate the identity of their customers, collect relevant personal data, carry out AML checks, and identify politically exposed persons (PEPs) for monitoring.
The basic KYC requirements include name, date of birth, address, proof of address, and identification number with supporting documents. Though you can create your own KYC solution and a team, it’s usually wise to partner with a KYC service provider that can tailor services to your unique needs. It takes the extra effort and time off your hands. Many KYC vendors offer solutions that can be easily integrated into your platform with a few lines of code, API or widgets. When done, customers get authenticated at sign up or at return to the platform. This way, it deters those wishing to carry out fraudulent activities like internet scamming and money laundering, and also makes transaction monitoring easier.
- Train Staff on AML Compliance
Training the accounting, product, sales, finance, and compliance officers on KYC and AML policies, money laundering, and customer due diligence is essential. Ensure you educate staff on risk assessment procedures, recordkeeping, and how to identify red flags such as unusual transactions or identity verification discrepancies. Afterwards, your team should be able to identify suspicious users and activities that indicate fraudulent behavior.
For example, requests for additional documents and liveness checks can be done on customers with conflicting identification numbers or unverifiable documents. Plus, you can do trainings regularly to keep up with the ever-changing AML regulations.
- Have Compliance Officers or Department
If you can afford to, recruit compliance officers to manage risk assessment frameworks, develop and implement anti-money laundering compliance policies, and train staff on AML compliance. These compliance officers are also in charge of regular business compliance policy audits, determining customer risk levels, and developing reports on any red flags relating to potential money laundering schemes.
Note that your AML compliance officer’s expertise should reflect the current and evolving AML regulatory climate.
Conclusion
To prevent and report potential money laundering situations, you need a proper AML policy in place. Failing to be compliant will result in severe AML fines and penalties, and could affect your business growth. ID verification companies offer a suitable way for online businesses to carry out KYC and AML checks through identity verification and AML compliance.
