To stay efficient in the competitive market and in line with present customer demands, financial institutions are making efforts to upgrade their systems. However, criminals are using cutting-edge technologies to deploy difficult-to-detect schemes and escape AML compliance checks. With tools like photoshop, 2D/3D masks, and others they easily create synthetic identities. This further helps them onboard platforms, and expose financial institutions to serious legal as well as reputational repercussions.
Financial institutions require robust digital solutions to stay ahead of criminals. Due to its rapid adoption, the anti-money laundering market is forecast to cross $1.77 billion by 2023. With services like real-time verification, suspicious detection, and ongoing tracking of transactions, AI-powered solutions are sure to safeguard financial institutions. This blog further covers the latest AML system trends.
AML Verification – Outlining Advancements Within Financial Institutions
As financial institutions are bringing innovations such as digital banking, criminals are making efforts to exploit this system. Where customers can access their accounts online and make transactions, cybercriminals are deploying advanced strategies to hack into them.
Criminal attempts not only leave legit clients with huge financial losses but also drives reputational damages for the respective institutions. Therefore, in this rapidly evolving world, banks and other firms rely on anti-money laundering solutions to prevent money laundering and terrorist funding.
In recent years, AML security systems have taken new forms and leveraged robust solutions for fighting criminal intentions. Furthermore, it helps financial institutions to stay put with regulatory standards, and provide a secure banking experience. However, on their way to upgradation, digital services remain a vital component of financial institutions’ AML compliance framework.
From ensuring Customer Due Diligence (CDD) to keeping tabs on customers, AI-powered solutions are guarding every operation of banks and other firms. The next section provides insights into the latest anti-money laundering technology trends that are prevailing in financial institutions.
Machine Learning – Analyzing Huge Datasets
While financial institutions facilitate customers with online payments and seamless deposits/withdrawals, they can not rely on conventional manual AML verification methods. Criminals commit account takeover fraud that further increases the need for financial institutions to bring in efficient combatting measures.
Financial institutions deal with billions of transactions which require them to analyze huge datasets. These mainly involve customer identity information and transfer details to detect criminal attempts. In order to automate the validation process, financial institutions can rely on Machine Learning (ML). This technology not only speeds up the monitoring process but also drives accuracy by eliminating the chances of false positives.
Easy Access to Global Watchlists
Criminals often target far-off and less regulated regions to flow their illicit funds and convert them into legit money. This helps them escape the AML compliance checks while steering clear of transaction validation as well. This requires financial institutions to collect information from global sources, analyze it, and grant access to legit customers. Therefore, AI-powered AML solutions provide easy access to sanctions, Politically Exposed Persons (PEPs) lists, and adverse media to validate international clients.
In case of adverse media screening, financial institutions face several hurdles such as different languages. However, AI-powered AML screening solutions overcome this issue by providing banks and other firms carrying out cross-verification with a spectrum of language sets. These technologically driven services streamline the screening process of global customers to help financial institutions ensure compliance with regulatory standards such as CDD requirements.
Regulations for Crypto Trading
Cryptocurrencies are continuously gaining traction in every region of the world. Simultaneously, they are becoming a prime attraction for criminals for hiding their ill-gotten funds. They target regions with lax AML compliance checks to move their money anonymously across borders.
In response to criminal threats involved in crypto trading, regulatory bodies from around the world are placing necessary restrictions. For this, Singapore put forth the Payment Services (PS) Act, European Union (EU) enforced Anti-Money Laundering Directives, and FinCEN also placed certain regulations in force.
In order to stay compliant with regulatory standards, cryptocurrency exchanges require AI-powered solutions that provide authentic screening of customers prior to their digital onboarding. They also help track transactions to detect and prevent money laundering.
In the End
With the increase in cyber criminals’ attempts, it is becoming a liability for financial institutions to implement AML solutions. The AI-powered services not only promise to uphold the integrity of banks and other businesses by helping them detect suspicious activities in time but also help them streamline their compliance process.
The cutting-edge AML monitoring solutions further help financial institutions stay ahead of emergent trends. Ultimately, by employing tech-driven anti-money laundering mechanisms, banks and other institutions can detect and deter financial crime risks in real-time while providing a secure environment to legit customers.