5 Reasons Why Every Business Needs Aml Solutions

Anti-money laundering policies are usually associated with banks and financial institutions. However, the recent digitization increase has prompted each industry sector to safeguard its interests. Although the digital revolution presents many opportunities in areas such as digital onboarding, it also brings a horde of cybercriminals. In 2022 alone, there was a 50% increase in penalties on businesses due to money laundering. Due to such catastrophic danger, it becomes imperative for every business to adopt AML solutions. Cybercriminals are extorting more and more companies with each passing day. Even if the threats are not direct, malicious actors use unsuspecting agencies to launder their ill-gotten gains. In the wake of such activities, the global market for AML systems is expected to reach more than $29 billion by 2027. This blog discusses five key reasons for every organization to implement AML solutions to protect the business and its customers.

1. Enhanced Due Diligence

The very first step for any business is to identify and verify its customers. Moreover, this is important for both physical and online businesses. In recent years, the world has seen a massive shift toward digital onboarding. It essentially means that the customer does not have to be present physically to prove their identity. Instead, they can send scans of their ID documents for this purpose. However, wrongdoers can exploit the system to carry out malicious activities. Therefore, AML solutions provide a crucial barricade to deter such attacks and identify genuine customers. On the same note, businesses can use the same AML screening to vet their investors. Thus, providing multi-faceted protection at all fronts of the business.

2. Compliance with Regulations

Due to the rise of money laundering activities, AML compliance is now more strict and robust. Previously, the Bank Secrecy Act (BSA) and USA Patriot Act regulated the verification of customers. However, there are now more regulations than ever. For instance, the AML 2020 Act introduced significant changes to the Patriot Act. The 5th Anti-Money Laundering Directive (5AMLD) is another prime example of the ever-tightening regulations. Apart from global guidelines, certain regions have their own set of rules to protect their citizens. For instance, Europe has GDPR for such purposes. Considerably, it can be burdensome, not to mention resource-taking, to stay compliant with these regulations. AML solutions provide a one-stop seamless answer to all these worries.

3. Real-Time Risk Screening

Most people assume that AML solutions only provide verification at the onboarding stage. However, the real advantage of AML monitoring is its capability to perform ongoing transaction screening. Once a customer or investor onboards with the business, AML security will create a risk profile. It keeps tracking the transactions of these individuals and entities and also monitors their associations. Under normal circumstances, it will not raise any alarms. However, if the customer performs any illicit or vague transaction, the risk profile will shift to a potential threat. Therefore, it alerts the client in real time about these risks. 

4. Facilitating International Transactions

Unlike domestic transactions, international ones are more complicated and have different classifications. For instance, high-value foreign payments, offshore money transfers, and card-not-present (CNP) payments are just a few of these types. On one hand, customers expect and demand swift and secure payments. However, the diversity of payment methods and types makes it hard for institutions to properly track and verify them. AML solutions can help in such scenarios by providing automated AML verification for these transactions. Similarly, companies also have to ensure that payments do not involve any person or location blocked by Financial Action Task Force (FATF). Fortunately, AML solutions provide this service as well, thus ensuring complete security.

5. Better Customer Experience

As discussed above, customers always demand seamless onboarding and operations. However, the rising fraud cases and identity theft can scare them from using unsecured services. Therefore, it becomes necessary to implement AML solutions to provide ease as well as robust protection. To be precise, onboarding is the first impression of a business. AML solutions ensure that customers get the absolute ease they expect. Whereas, continuous monitoring and risk management allow businesses to safeguard customer interests in the long run.

Final Words on AML Solutions

To sum it up, digitization is changing the regulatory landscape all over the world. Where it provides immense ease for customers, such changes can be burdensome for businesses. From compliance with the rules to securing customer interests, these tasks consume a lot of resources. In these circumstances, AML solutions aim to provide a seamless solution for customer identification and ongoing risk assessment.