The rapid developments in technology and their adoption in the multiple sectors are making processing more actionable. But, the innovations in the financial information and communication, information flow to multiple industries make it hard to combat the money laundering cases actively. The laundry cycle in money laundering is of clandestine nature. The deeper it gets absorbed in the banking systems, the more it gets difficult to track the origin of it. The money laundering amount is estimated to be 2-5% of global GDP which makes it about $800 billion. This huge amount is an alarm for the financial institutions to take serious precautionary measures and embed high-level security.
Traditional banks and financial institutions hire more people to vet customer accounts, monitor transaction processes, transfer money, perform Customer Due Diligence (CDD) and KYC, etc. The institutions are aware of the significance of KYC and AML screening against each customer to make sure that the entity getting part of the system is not involved in any illegal activity. Otherwise, these institutions can be subjected to heavy regulatory fines and monetary loss. Manual customer verification gets hectic for the staff to perform for each customer individually. Therefore, this traditional method is replaced by automated verification systems and is highly adopted by legitimate organizations.
Manual AML Problems
The major issue as discussed above is the time and effort of staff performing manual KYC and AML compliance processes to align with the organizational requirements. The inordinate time that is spent on individual identity verification can be used in some other productive tasks. Also, auditing record is not that smooth especially when it comes to extracting the information on an urgent basis. To optimize the throughput of human power and introducing efficiency in the system, automation can help.
Additionally, to comply with the obligations of local regulators, AML/KYC compliance is the primary goal of each financial institution. These programs are in most of the cases, built-in silos that are operating one business division, unit or state. In such cases, there should be consistency among procedures and standards to keep track of records in a holistic manner. Manual AML verification makes this task hard and jumbles up the data somehow.
Automated AML Screening has got it Covered
The general trend of the financial institution is shifting towards innovation and technological automation solutions for efficient and comprehensive methods of screening and auditing. In this way, the focus would be more compliance programs as compared to the cumbersome processes. The sectors who are directly or indirectly the target of money launderers and fraudsters are in dire need of innovating their data analysis and screening processes using online identity verification services. Automated screening of customers is done against sanction lists and are verified against Politically Exposed Person (PEP) checks and AML background checks. These built-in checks are already part of the identity verification API which undergoes streamline verification and authentication processes while providing better and predictable insights. Also, transaction monitoring has become easier with automated AML for the tracking of the number of transactions and transferred amounts.