Money laundering is the process by which criminals siphon off the money by forgery. In this process, criminals use numerous channels to wash away the money. The swindler then integrates it into a more acceptable and legal financial system in an effort to evade the law protectors.
Anti money laundering
Anti Money Laundering refers to all the institutional, business, financial, and judicial process which coerces a financial institution to monitor its existing policies. AML policies require most institutions to comply with a set of formal structures before admitting new members or clients. AML aims to fight against fraud accounts and strives to eliminate terrorist financing. Anti money laundering advice helps in mitigating the risks associated with laundering activities.
Why is Anti money laundering important?
AML helps in setting out guidelines and parameters which can be followed by banks and other financial institutions. It also helps in vanquishing money siphoning altogether. So definitive advice on setting up AML procedures in the institutions is necessary to cold shoulder the launderers.
Anti money laundering compliance
All financial institutions must comply with some basic requirements which will ensure the best security. The AML program must be able to detect fraud in the system. The program should be headed by a compliance officer who will be responsible to maintain the compliance across all levels. There are some firms also which offer anti money laundering advice for a fee. Some basic components of AML compliance can include:
- Assessing the risk
Banks can gauge the risk factor of a customer of a short profile review. The banks also devise a scoring test to zero in on high risk or low-risk clientele.
- Know your customer
It is the duty of the compliance officer to ensure that every client complies with the KYC documents in the bank. The KYC document is the most important criteria for determining the eligibility of the customer. A customer failing this KYC compliance should not be allowed to open an account in a bank.
- Alleviating the threat of money laundering
There are internal systems designed to meet the challenges of money laundering. All internal control systems should include establishing the rules and responsibilities and reporting any suspicious activity. Devising an internal training program for employees is also an important step in compliance monitoring.
Anti Money Laundering Advice
There are various firms which provide anti money laundering advice. The advice which are provided includes:
- Advice on policy and process of the organisation.
- Providing proper training to the employees
- Restructuring the existing policies
Anti-money laundering services are no doubt costly and some financial institutions raise objections regarding this. But, it should be remembered that it is an essential tool in protecting the financial system of a country and so it is the duty of every organization to follow this diligently.