Banking and transactions have been scrutinized now to avoid any financial fraud or money laundering. This has made traditional banking and transactions a bit outdated now, as this switch has become more of a necessity. Bypassing the traditional system was easy and had some loopholes, but bypassing the digital system is tricky as it’s not that convenient to find any loopholes in the system.
This has enabled us to put a nail in the coffin of financial fraud and financial crimes. One such example is money laundering. A huge amount of cash flows into the system coming from money laundering activities. But does it concern where the money comes from? Isn’t it just the money that matters?
Buying famous paintings and antiques is a status symbol or just an act to launder money. For some, it might be out of passion, but the truth behind it is not as astonishing as the paintings and antiques. Most of these purchases are made to launder the money, or in other words, to convert black illegal money into legal white money without disclosing its source. It is one of the most common methods of money laundering because there are numerous loopholes to exploit.
These kinds of activities have been followed around by people, and to ensure that this doesn’t happen too often, an Anti-Money Laundering Platform has been developed by various organizations. Anti-Money Laundering (AML) is a platform that performs screening of clients who might pose a risk of potential financial crime for the organization during the initial onboarding process of a client. It is also defined as a set of policies, laws, rules, and regulations governed by the government to prevent any sort of financial crime. To keep track of money laundering activities, the government and other larger financial institutions use AML. The main purpose of implementing AML is to prevent money-laundering activities, and organizations are to follow the same. The process is described as:
- Know Your Customer (KYC)
- Software Filtering
- Holding Period
This three-step process is followed by each organization using the AML platform. This platform is customizable as per the requirements of the organizations and provides a detailed report of the clients and the threat level possessed by them. It has proved to be of great help in reducing the risk of financial fraud and other financial crime activities. Screening of clients is done and based on the risk level; further proceedings are carried out. As a sum of the entire process, it is appropriate to say that AML platforms have proved useful and have found their place in the financial institutions’ integral processing system.