The modern world is now a slave of technology and everybody is using advanced technologies one way or the other. From routine house chores to business processes, everything somehow relies on technology. It may sound bad to some of you, but many people find digitization a blessing. Fraudsters are also benefiting from the advent of technology and the digital era has become a goldmine for them. Artificial Intelligence, Machine Learning, and Deep Learning are not only assisting businesses, but criminal activities have become more sophisticated than ever.
Over time, money laundering, terrorist financing, and other illegal activities have significantly increased. All the sectors are now emphasizing robust security measures to prevent fraud as much as possible. For that, companies have to verify the customers during the onboarding process to make sure none of the customers in PEPs or sanction lists is onboarded. In simpler words, anti-money laundering screening during customer verification is essential. Wondering about AML software and how does it work? Keep reading this blog and you will find all about money laundering and an effective way of combating it.
Money Laundering and Its Stages
Anti money laundering is the act of concealing the origin of illegally earned money. Generally, criminals hide their black money by investing it or transferring it into different bank accounts. For hiding the funds, fraudsters rely on three stages to perfectly conceal the origin. Here are the three stages of money laundering you must know about:
In the first stage, money is placed into different places, usually bank accounts to avoid the attention of regulatory authorities. Placement only considers the distribution of a large amount of black money into smaller amounts that seem normal like other transactions. Fraudsters target casinos, banks, insurance companies, and even online gaming platforms.
Here, the money placed is shaped in the form of bank drafts, money orders, etc. for further processing. Launderers use different accounting tactics to dodge regulatory authorities. Many fraudsters invest in real estate or other big assets that make it difficult to identify the origin of money.
This is the third stage where the money is brought into the economy for circulation. Once circulated, it becomes almost impossible for any anti-money laundering department to trace the origin of money.
Benefits of AML Solutions for all the businesses
Using anti-money laundering screening software can ensure plenty of benefits for the businesses. Here are some of them that might interest you.
Prevent Money Laundering and Terrorist Financing
This is the most important concern of businesses, especially financial institutions because criminals use these entities for layering and placement of black money. Moreover, account takeover fraud is now resulting in money laundering. Furthermore, money mules are rapidly increasing and giving financial institutions a tough time.
Fraud Prevention with AML Screening
Apart from money laundering and terrorist financing, identity theft and synthetic identity fraud have remarkably increased over the years. Anti-money laundering verification will ensure fraudsters stay away from your business and anyone who has been highlighted in the sanction lists or PEPs list will be identified before any trouble.
Complying with the KYC and AML Regulations
Complying with the stringent know your customer and anti-money laundering compliance has become a tough job these days. All industries have been suggested to follow the guidelines otherwise hefty fines will embrace them sooner or later. With AML software you can secure your business from these issues.
Enhanced Customer Experience
Enhancing customers’ experience is difficult without robust security measures. Studies show that customers feel valued if there are any measures taken for their security and with AML checks, you can attract customers and retain the existing ones without extra efforts.
Money laundering and terrorist financing have significantly increased over time, and there is a dire need for a robust solution that can help companies in combating the two rapidly growing crimes. If businesses incorporate AML screening during customer onboarding, there is a high probability that the chances of money laundering and counter-terrorist financing will significantly reduce. Money laundering is completed in three stages and each stage increases the complexity for tracking illegally earned money. Adding anti-money laundering screening improves customer experience, builds trust, and prevents fraud.