Definition of AML
Anti-Money Laundering(AML) is the act of screening a person on a watchlist before onboarding into business and monitoring any suspicious activities related to money laundering. The former action requires screening the person from the global AML database. By screening the potential users, businesses can stay compliant with safe and trustworthy users. The latter action is detecting any suspicious transactions from the potential users. Money laundering is a type of financial crime referred to as a suspicious activity. It aims to conceal the crime and deter the origin of the money. Money laundering disguises as if the money was from legitimate actions when it is not, and that’s why AML aims to prevent any illegal actions in finance.
AML in Global
Under the mission to devise international standards on preventing money laundering, a group of countries around the world formed the Financial Action Task Force (FATF). FATF was formed with multiple countries and organizations in 1989, and now has 39 members consisting of 37 member jurisdictions and 2 regional organizations. After the 9/11 attack in the US in 2011, FATF expanded its mandate to include combating terrorist financing.
As global Anti-Money Laundering(AML) regulations are getting more stringent, nations are forming compliance organizations to combat any illegal finance activities including financing terrorism and organized crime. Bank Secrecy Act in the USA, EU Anti-Money Laundering Directives(AMLD), and FINMA Anti-Money Laundering Act in Switzerland to name a few.
Governments fight against money laundering and terrorist financing by applying AML regulations and compliances on financial companies. That is why AML regulations require financial institutions to check customers before joining the business and to get checked from the watchlist database. In addition, the regulation commands finance firms to monitor customers’ transactions and report on any suspicious financial activities. This way financial institutions can monitor and combat illegal money transfers. Activities do not limit to financing terrorism, but also include market manipulation, trade in illegal goods, fraud, corruption of public funds, tax evasion, bribery, and organized crime.
Difference between KYC and AML
KYC and AML are sometimes used interchangeably however there is a difference. KYC, Know Your Customers, implies verifying customers’ identities. KYC process allows trusting customers through the identity verification process. AML works as an umbrella term where it’s a regulatory process finance companies must need to comply with. KYC is part of AML where it verifies customers’ identities.
KYC process allows to identify customer’s information and AML program enables to screen any possible risk on money laundering including possible illicit activities. Data extracted from the AML screening can be used by firms to check customer risk profiles while enhancing compliance performance.
AML screening can be divided into few categories based on the KYC process. Global Sanction Lists, Administrative Orders, Politically Exposed Persons(PEPs), Relatives and close associates(RCA) of PEPs, Financial crimes, special interests, and media, public records, internet, and other sources. You can find detailed information on Argos AML Screening page.
By complying with AML regulations, firms can support governments in preventing any illicit financial actions. Not only that AML screening can also guard companies against any customers who may be related to high-risk activities.
Why Argos KYC
Argos KYC provides a seamless KYC solution to help you identify your customers Anyone Anywhere Anytime. Argos KYC provides AML Screening service for you to check who may be able to board on to your business. Argos AML Screening provides 1) Global AML Database, 2) Real-time AML reports on risk profiles, 3)Multiple languages for the provided data. By complying with AML regulations, keep your business meet regulatory process and secure from any possible risk-related clients. Protect your business with customers who have completed the identity verification process and AML screening checks.