AML Compliance Program – Requirements that Align with the Regulations

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Industries are on the verge of facing hefty losses to emerging financial crimes. Criminals use advanced techniques like hiding their source of funds, to trick the AML screening processes. This helps them bypass the customer verification at the registration stage. Furthermore, they commit identity theft to act as imposters to open accounts, apply for loans, and make hefty transactions. 


Therefore, the financial institutions need to employ improved AML solutions to verify customers, Ultimate Beneficial Owners (UBOs), and sources of funds. Furthermore, AI-powered solutions help financial institutions to monitor their customers’ actions. This blog covers the important component in AML compliance that financial institutions need to consider along with the requirements for the verification process.  


AML Verification – Crucial Components Financial Institutions Must-have

According to the United Nations Office on Drugs and Crime, the annual money laundering amount ranges from $800 billion to $2 trillion. This is why regulatory authorities are revamping strict regulations like 6AMLD, BSA, and 40 Recommendations by FATF. In case of non-compliance, the regulators will impose more hefty penalties than were set before. 


Therefore, financial institutions require more accurate AML monitoring solutions to stay a step ahead of criminals. Banks and other financial firms need the following measures: 

Identification of Customers and Documents Validation 

This check involves the verification of customers’ identities along with their documents. The world is moving towards complete digitization which has enabled criminals to use advanced methods. They use fake credentials and forged documents to onboard legitimate financial platforms. 


However, AI-powered solutions help financial institutions to identify customers in real-time. The system asks for information and documents. It further extracts the required data and cross-verify it within databases. The information includes the date of birth, full names, and proof of address. For document validation, the system asks for ID cards, passports, driver’s licenses, utility bills, mortgage statements, and insurance papers.    

Improved Customer Due Diligence

Due diligence refers to the risk assessment of customers and companies. During this process, the financial institutions identify the risk entities possess, for instance, do they have a clean police record. Furthermore, the financial institutions cross-verify customers’ identities against sanction and Politically Exposed Persons (PEPs) lists. These help financial institutions prevent money laundering by identifying UBOs, sources of funds, and customers’ identities. 

Ongoing Tracking of Customers

According to the Anti-Money Laundering regulations, it is sufficient for financial institutions to verify customers only at the time of registration. They should perform continuous due diligence and track customers’ activities. In some cases, criminals use fake identities to open accounts but continuous monitoring can identify them in later stages. For instance, repeated transactions that exceed the threshold serve as a red flag here. This will help financial institutions to detect suspiciousness on the go and report it to regulatory authorities. 

AML Compliance – Building an Effective Program

According to Shufti Pro News, regulatory authorities mandate financial institutions to perform continuous monitoring of their customers. Therefore, financial institutions need robust AML systems to ensure compliance as well as protect their reputation. For this they need to include the following:

AML Compliance Officer

As regulatory authorities mandate, banks and other financial institutions should hire an expert to guide them through the AML compliance program. The officers serve as the liaison for banks as they effectively perform their role. 

Training for the AML Compliance

Along with hiring an expert, financial institutions should also train their employees so that they can identify suspicious activities on their end. Regulations mandate that financial institutions should carry out continuous AML screening of their customers. Here, the employees can perform as internal AML officers. 

Ongoing Monitoring and Reporting Suspeciousnes

This includes the constant monitoring of customers, their transaction, and changes in their information. The authorities have set transaction limits that apply to customers and affiliated companies. Therefore, in case of transactions that exceed the threshold, financial institutions should report them to authorities. This is because such activities can lead to money laundering and terrorism financing. Therefore, financial institutions require robust AML security measures to detect suspicious transactions in time and prevent chances of criminal threats.  

Keeping Records Up-to-date

Next in the line is record keeping. Regulations oblige financial institutions to update their records periodically. If customers are changing their address or name, financial institutions should keep track of them. Shufti Pro Funding indicates that the AI-powered AML monitoring solutions help financial institutions to access global databases and update their customers’ information. 

In the End

Financial institutions are facing a dramatic increase in losses due to money laundering and terrorism financing. Moreover, these crimes also uplift the chances of hefty non-compliance penalties. Therefore, financial institutions need to incorporate robust AML solutions to verify customers and track their activities. This way they can report criminal activities in time and prevent reputational damages. Furthermore, financial institutions need to meet certain requirements to build an effective AML program. Lastly, AI-powered solutions help financial institutions to mitigate criminal threats.