Money laundering has been one of the most serious crimes that have a humongous impact on the business. Money laundering is not something reserved just for the big screen. According to a survey, the annual global money laundering transactions account for about $1 trillion to $2 trillion which is 2% to 5% of global GDP. The common target for money laundering is small businesses. Increasing money laundering can be kept at bay with the help of the best Anti-money laundering software. The anti-money laundering software offers the users a shield of security to keep the money safe.
What is money laundering?
Money laundering is the generation of large amounts of money through various criminal activities from legitimate sources. In simple words, money laundering is the process of taking dirty money and cleaning it. Money laundering is done by three major steps which are placement, layering, and integration.
- Placement is the step where the dirty money is put into legitimate financial systems such as a bank.
- Layering is the step in which the source of the money is concealed through various transactions and bookkeeping tricks.
- Integration is the withdrawal of laundered money and normal usage.
Money laundering is a risky job that earns up to $500,000 of fine or double the property or imprisonment for about 20years.
What is anti-money laundering?
Anti-money laundering is a set of laws, regulations, and procedures that is designed to prevent people and deter people from hiding illegal money as a legitimate income. It is in the hands of the financial institution to monitor the deposits of the customers and ensure that it is not a part of any laundering scheme. Unfortunately, the laws of AML are slow to catch up to the cybercrimes as most of the laws are designed to detect dirty money as it enters the traditional banking systems. Establishing a robust AML transaction monitoring software helps in identifying dirty money way earlier and not just through the traditional system. Let us see how AML software helps to identify and avoid money laundering.
- Enhanced due diligence: The AI-driven software automates the enhanced due diligence process. The steps are taken by providing a clear cut idea about the people with whom you are dealing, understanding, and monitoring all their activities in various transactions, and accessing the risk of money laundering.
- Reviews odd transaction patterns: In the case of money laundering, the launderers use several accounts to perform just small transactions which will easily surpass without getting caught. This pattern might miss the human eye but automated AML software solutions can identify the smaller transactions and unveil any pattern that is an effect of illegal activity.
- Identification of the politically exposed persons (PEPs): Compliance for PEPs is mandatory for financial firms. This is essential to identify the risk that is associated with your customers. If a person is holding a public office or a function then he is a politically exposed person. If you want to do business with such an entity, you have to perform due diligence and monitor the ongoing transactional activities.
Money laundering is extremely serious for small businesses. It will expose you to hefty fines and imprisonment.
The financial sectors should consult the best anti-money laundering solution providers and install robust AML software in place to make sure that the transactions made don’t involve dirty money.