Anti-Money Laundering is the set of rules, policies, and regulations devised to prevent financial corruption. AML has now become a universal term for the movement against financial fraud, especially money laundering.
In the past few decades, the menace of money laundering has become quite prevalent. That hits close to home for the corporate sector across the world. You must have heard stories of multi-million dollar companies involved in money laundering and corruption scandals. Therefore, many countries have made it obligatory for corporations to comply with AML regulations. To oversee this process, most companies have designated AML compliance departments.
To help our readers fully understand the concept of AML regulations, let us first break down what money laundering is.
What is Money Laundering?
Money laundering is a criminal offense based on the legalization of money acquired from illegal sources. In numerous cases, this laundered money is used for unlawful activities and to sponsor acts of terrorism. With the constant advancements in technology, money laundering methods are becoming more and more sophisticated. As per the statistics from IMF, the global money-laundering accounts for up to 5% of the world’s GDP.
To combat this menace, policymakers at the local and international levels are constantly devising new rules and regulations. These rules are known as Anti-Money Laundering (AML). Global authorities like the Financial Action Task Force (FATF) have come into existence to formulate AML policies and ensure their implementation.
The Anti-Money Laundering Process
As per the AML procedure, there are various laws and regulations to prevent global money laundering. As per JD Supra on AML Consulting, these laws apply to a vast category of institutions and organizations, and compliance with them is mandatory. Failure to adhere to them can lead to penalties and legal action against businesses by federal agencies.
Enforcing Criminal Laws
To combat financial crimes, both governmental and private organizations have implemented strict criminal laws against money laundering, in line with the United Nations Convention Against Transnational Organized Crime. In order to effectively prosecute money launderers, governments are advised to adhere to established protocols. If you’re in need of a reliable Fraud & Embezzlement attorney in Oakland, you don’t have to look further!
Know Your Customers
As per the AML regulations, companies must learn more about their customers by performing background checks. After analyzing this information, company executives can look out for suspicious activities and transactions of their customers. For example, if a customer with a track record of financial crimes successfully carries out a transaction through your firm. It will be recognized as a substantive crime on your company’s behalf, leading to severe legal repercussions. Therefore, companies and other financial institutions should strictly follow the global AML protocol to avoid their involvement in financial crime.
Transaction Tracking
As we have discussed, knowing your customer is essential for ensuring your company’s compliance with local AML policies. However, you can not be entirely reliant on the information provided by your customers. Therefore, it is always helpful to keep track of customer transactions. That will help your organization identify any suspicious transactions and alert relevant authorities. Recently, companies have become more receptive to AMLTransaction Monitoring Software, helping them detect and stop any unlawful activities happening via company channels.
Compliance with anti-money laundering is essential to combat financial crimes, monitor potential fraudulent activities, and counter-terrorist financing. Remember, as law-abiding citizens, it is our responsibility to help authorities track down money launderers and their associated culprits to protect our country from corrupt practices and terror-related activities.