Anti-money Laundering Checks - A Strong Defense Against

Anti-money Laundering Checks - A Strong Defense Against

From Smith Morkel

AML verification prevents financial crime across the corporate sector and allows entities to keep criminal figures at bay, keeping intact regulatory compliance.

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Money laundering is a growing concern for financial institutions these days. Money launderers are present around the world. Money laundering is the process of making money through illegal means such as drug trafficking, human trafficking, etc. It’s a white-collar crime in which the culprit used to make his money legal through different means such as investing in cryptocurrency. Money laundering is the root cause of financial imbalance for developing countries that prove to be an obstacle in the development of these countries.


According to Forbes, about 90% of laundered money is unidentifiable. Money laundering affects countries as well as different organizations in various aspects such as economic distortion, corrosion of financial sectors, and reduction in government revenue. To reduce the evil of money laundering, different anti-money laundering organizations are working to combat this problem. Let’s discuss a bit about anti-money laundering.

Anti-money Laundering

The act of making different policies and standards made by financial regulatory authorities to stop money laundering is called anti-money laundering. The purpose of AML is to stop money launderers from hiding their money in financial institutions and to take money back from them. In July 1989, AML became famous when FATF (financial action task force) came into existence to deter anti-money laundering. FATF is responsible for making rules and regulations for countries to comply with these rules. Currently, FATF has 37 member countries that are complying with FATF AML regulations. To stop money laundering, countries have to comply with AML regulations set by FATF.


What are AML Checks?

AML check is performed to screen out the customers or businesses to know the current reputation and to check whether they are involved in any illegal activity or online fraud. AML checks are used by financial institutions like banks, insurance companies to know the current status of their end-users before giving them access to their services. The main reason for introducing AML checks is to verify the end-users whether they follow AML rules and regulations or not and to monitor customers' activities. AML checks just help to find out the person which is involved in any suspicious activity or having a substandard financial background. So, financial regulatory bodies make some rules and regulations to follow for all financial organizations to fight this evil, and AML compliance is a solution for this problem.

A process in which financial institutions such as banks, insurance companies follow the rules and regulations made by financial regulatory bodies to stop money laundering is called AML compliance. AML screening is done by checking global watchlists, sanctions, and PEPs lists.  Financial institutions such as banks, stock exchanges, real estate companies, cryptocurrency markets should verify their customers or businesses using AML screening. By complying with AML regulations, businesses can prevent financial fraud.

Money laundering and terror financing is a growing threat for businesses these days and by complying with AML regulations, financial crimes may reduce up to some extent. AML software performs customer and business screening by comparing with AML databases to recognize high-risk bodies in real-time within seconds. In this way, the chances of money laundering are reduced, and businesses can avoid non-compliance fines.

Nowadays online businesses are a bit insecure and they always have a threat whether their end-users are AML compliant or not. Businesses need to fulfill all regulations led by FATF and other regulatory bodies of their respective countries to improve their brand image. It provides businesses with the true identity of customers and keeps track of the customer’s activities regularly. So, AML KYC compliance makes businesses able to verify their customers.

Aside from KYC measures, businesses can apply customer due diligence techniques to comprehend their clients' risks. CDD techniques distinguish clients' dangers and take essential measures, however, a few clients are high risk such as PEP’s. CDD measures may not be adequate to recognize these individuals' dangers, therefore enhanced due diligence techniques might be applied for this.

It is used to protect businesses from high-risk customers by checking them regularly through sanctions and politically exposed persons lists. In ongoing AML, the user’s data is reviewed with the latest records from the lists of high-risk countries, politically exposed persons, Prepaid cards, cryptocurrency markets, and crypto exchanges to check the current status.


By complying with AML rules and regulations, businesses help to improve their brand image and follow all security standards led by FATF and their respective regulatory bodies. It also helps businesses to make good relations with other corporate sectors without having a danger of financial loss and losing brand reputation.

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