About 2% to 5% of the world’s GDP is laundered every year, which comes down to around $800 billion to $2 trillion approximately.
Money laundering has been a persistent global problem over the years, which is why the Anti-Money Laundering regulations have been put in place to help companies detect money laundering activities and stay in compliance.
However, detecting money-laundering activities manually can be daunting and ineffective due to its inadequacies, and this is where the use of AML software comes in.
In this article, we will discuss what AML software is, its unique features, and the various reasons to invest in AML software as a company.
Let’s get started.
What is AML software?
Anti-Money laundering (AML) software automates the processes involved in Anti-Money Laundering compliance to save you time. They enable companies to avoid, detect, examine and report any suspicious financial activity that signifies money laundering or fraud.
They are also used to track and flag suspicious financial activities involving high-value transactions.
With AML software, organizations can ensure AML regulations compliance, detect and prevent financial crimes in the organization.
Due to the level of financial transactions many companies are involved in, the use of effective AML software is necessary to evaluate and investigate financial transactions quickly and accurately.
Furthermore, exceptional AML tools can identify suspicious financial transactions because they are equipped with artificial intelligence to efficiently automate and monitor your financial transaction processes.
Features of AML software
AML software allows organizations to execute AML programs. Although they may possess different functions, they generally have four unique characteristics that enable them to perform their duties successfully. Let’s find out below:
- Name screening
Excellent AML software enables your team to identify blocked persons quickly.
It shows you if an individual or organization is blocked by organizations such as the United State’s Specially Designated National List so you can maintain compliance by not doing business with such individuals.
Their name screening feature also helps you identify Politically Exposed Persons (PEPs), so you can flag them to an institution and avoid the risks of doing business with them.
- Currency Transaction Reporting (CTR)
An excellent AML software consists of a CTR feature that identifies financial transactions consisting of large amounts of cash or multiple transactions leading to large amounts of cash over a short period.
For example, according to the Bank Secrecy Act, transactions involving over $10,000 would be flagged by default.
- Transaction tracking
The transaction tracking feature of effective AML software is focused on identifying suspicious customer transactions through account profiles and background details.
These transaction monitoring activities are often used to generate a Suspicious Activity Report (SAR) in the United States, then submitted to the Financial Crime Enforcement Network (FinCen).
AML software helps businesses comply with the Bank Secrecy Act’s Anti-Money Laundering requirements by automating and streamlining the day-to-day compliance implementation.
Through its data management capabilities, AML software is used to record employees’ training and audits. It is also used to monitor their reports to ensure they adhere to the Anti-Money Laundering requirements and policies.
Benefits of investing in AML software
AML software is critical to complying with AML regulations. The policies require a huge amount of data relating to customer transactions which traditional and manual approaches cannot operate efficiently.
To avoid financial crimes and stay in compliance, AML software can process the large amount of data involved accurately and efficiently, thereby helping organizations control their financial transactions faster and more effectively.
But that’s not all; AML software provides other tremendous benefits to organizations. Let’s check out the top reasons to invest in AML software below:
- It provides an effective customer monitoring process
Organizations need efficient AML software to help track their customers’ activities effectively. This can help you detect suspicious financial activities early and flag them to appropriate authorities.
Apart from keeping you in compliance, it also automates your customers’ monitoring process to save time and reduce the stress and inadequacies associated with consistent customer tracking.
- It assists with remittance and payment screening
For many businesses, thousands of financial transactions take place daily. However, due to the influx of financial activities, there are often increased chances of financial crimes.
To prevent this, it is important for businesses to control their financial activities. They can do this through strict monitoring of the activities of the parties involved in every transaction that occurs through AML software.
AML software works to screen every transaction and detect various suspicious transactions. It raises alarm when it detects different lists to stop suspicious transactions and generates feedback so that organizations can flag the accounts to appropriate authorities.
- It improves the customer onboarding process
The AML regulations require financial organizations to investigate their customers’ accounts before opening. They are expected to follow the Know Your Customer (KYC) policy and Customer Due Diligence obligations before registering a customer’s account.
With AML software, you can onboard your customers faster because it helps you automate the process. This way you can identify your customer risk level quickly before you open an account for them in your organization.
- It ensures you avoid reputational risks
It is crucial for organizations who want to maintain a positive reputation in the minds of their customers to stay in compliance with AML regulations.
This is because non-compliance can promote financial crimes, and companies fined by the AML body may be seen as untrustworthy.
Therefore, to build and maintain trust among your customers and potential partners, compliance with AML is critical.
First, it portrays you as a company that’s against money laundering with adequate measures in place to prevent such activities. It also helps you to avoid the negative perception that comes with financial corruption charges against your organization.
- It helps you avoid Anti-Money Laundering fines
Anti-Money Laundering penalty fines are constantly on the rise. Activities such as terrorist financing, fraud, money laundering, and other financial crimes attract great penalties.
Therefore, non-compliance with the AML policy can put your company at risk of any of these financial crimes, thereby making you vulnerable to the penalties associated with non-compliance.
Apart from projecting your company in a negative light, it also puts you at the risk of combating financial challenges from paying AML penalties and fines.
However, by using AML software, you can efficiently monitor your customers’ financial transactions to notice suspicious acts of money laundering and other financial criminal activities . You can then report them to appropriate bodies for necessary actions.
- It improves your customer experience
The customer onboarding process is often rigorous for financial institutions, especially when companies take manual and traditional approaches to onboard their customers. Unfortunately, these approaches are slow, making the onboarding process time-consuming for your team and customers.
However, your customers can enjoy a pleasant customer experience when your company introduces AML software.
By automating the process, they help to speed up the onboarding process, so you can check your customers’ risk level and create accounts quickly without delay, making their experiences with you more seamless.
- It allows risk assessment implementation
The AML Name Screening Software allows you to execute risk assessments during the customer onboarding process. They enable you to scan your Politically Exposed Person (PEP) customers’, sanctions, and past financial activities.
This real-time data allows you to achieve an efficient control process that allows you to protect your company from risk.
- It helps you to perform an advanced search algorithm
Advanced search algorithms in the AML software features allow customers to mitigate untrue positives and negatives when conducting customer screening and customer monitoring processes.
They ensure companies avoid mistakes with customer name and surname details to enable accurate Know Your Customer (KYC) and Customer Due Diligence (CDD) processes.
Therefore, with an advanced search algorithm in your AML software sanction, PEP, and adverse media screening, you can conduct successful customer screenings and customer monitoring processes to achieve the best results.
- It aids automation through Application Programming Interface (API) Integration
AML software automates the AML compliance processes through effective API integration. APIs are software intermediaries that allow two software to interact with each other. When you integrate the AML software with an API, you can secure a scanning process without any form of manual work.
For instance, if your company attends to an average of 20,000 customers per day, rather than go through the rigorous and time-consuming process of attending to your customers manually, you can use an effective API integration to attend to your customers’ queries automatically, which speeds up the process and saves you time.
- It saves cost
With the help of AML software, you can save costs by avoiding the sanctions of non-compliance and preventing financial fraud against your company.
They help you to monitor your customers’ financial activities efficiently to ensure financial regulatory bodies don’t block them. They also help you identify money launderers and fraudsters early to prevent your companies from fraudulent attacks.
This way, you can prevent financial losses and scale your business effectively.
AML software is essential to companies and organizations who want to stay in compliance with AML regulations, automate their compliance processes, and avoid financial losses associated with non-compliance.
In this article, we discussed the top ten reasons to invest in AML software for your business.
Lydia Iseh is a writer with years of experience in writing SEO content that provides value to the reader. As someone who believes in the power of SEO to transform businesses, she enjoys being part of the process that helps websites rank high on search engines.