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Importance of AML ongoing monitoring for Businesses

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AML ongoing monitoring

“Ongoing vigilance is not only critical to our national security but also to maintaining the integrity of our financial system.”

This statement from the U.S. Secretary of the Treasury, Jack Lew, addressed the public the need for AML ongoing monitoring and screening in the fight against money laundering and other financial crimes.

Given the importance of this statement, we can answer the question of why well-renowned financial institutions had to face billions of dollars in fines.

For example, HSBC faced a $85 million fine for not complying with AML transaction monitoring, NatWest’s £265 million penalty for failing to prevent £365 million in money laundering, Goldman Sachs’s $2.9 billion fine due to AML control failures in the 1MDB scandal, and ING Group’s $900 million penalty for AML compliance failures showcase how important it is to implement the ongoing AML screening solution in the AML regulations. 

In the following content, we will be discussing the importance of ongoing monitoring and how businesses can implement it for better results. 

Understanding the AML Ongoing Monitoring  

As per the Financial Action Task Force recommendation on combating money laundering, an AML ongoing monitoring system is defined as the unending surveillance of customers’ transactions as long as an individual remains part of the business relationship.  

To apply the robust monitoring process, businesses have to gather all the necessary information so that a random sample of higher-risk individuals can be taken. If any behaviors change in their transactions, preventive measures can be applied.

Advantages of Ongoing Monitoring for businesses

The continuous monitoring process keeps businesses updated about criminals’ inclusion or removal from the sanctioned lists. 

However, for an effective and efficient monitoring process, businesses also need to update their databases. Prioritizing high-risk individuals or businesses also becomes quite easy with the ongoing screening system.

Ultimately, business safeguards their business reputation and secure themselves from hefty penalties and fines from regulatory bodies.

What do businesses have to bear for non-compliance? 

It can affect business in many ways. For a moment, think about why regulatory bodies oblige companies to follow AML regulations, including Ongoing monitoring of clients and transactions. 

The purpose is simply to combat the chances of money laundering and other financial crimes.

What message are you conveying to them by not complying with it? You are helping criminals or assisting them in committing crimes. 

This is how the regulatory bodies see those who still need to implement the AML regulations fully.

As a result, financial institutions face millions of dollars in fines and penalties. HSBS Bank is an excellent example of this, as it did not comply with the regulations that helped criminals transfer millions of dollars to other countries facing sanctions by the United States of America.

Is ongoing AML Monitoring Essential for Financial Institutions

The expectations of regulatory bodies from financial institutions to perform robust AML monitoring not just once but regularly to detect the risk level and threat in real time makes it essential for businesses.

If we look at the consequences of not following the monitoring process, none other than monitoring is essential in combating crimes. Businesses also lose potential customers due to the company’s noncompliance efforts.

Best Practice for Conducting Ongoing Monitoring

  1.   Risk-Based Approach: Businesses need to implement a risk-based approach, which helps identify higher-risk customers.

  2.   Advanced Technology and Analytics: what else could be more effective than the advanced technology implementation in the monitoring process? It helps automatically detect unusual transactions 24/7 and report them to the relevant department for action

  3.   Comprehensive Customer Due Diligence (CDD): Knowing your customers is an essential part of the monitoring process. You need to conduct detailed due diligence on all your customers, and if you see some pose higher risks, conduct comprehensive due diligence on them.

  4.  Robust Transaction Monitoring Systems: Whom your customer with making their transactions relations. Transaction monitoring could detect where the money is moving and whether they are transferring money in jurisdictions more prone to money laundering and other financial crimes. So, make sure your business conducts comprehensive transaction monitoring.

  5. Regular Reporting and Documentation 

Maintaining records of your clients’ transactions is part of the ongoing monitoring process. This helps analyze the behavior of your customer transactions, and if any unusual transactions occur from regular clients, red flags must emerge to check whether the transaction is legal or illegal.

This helps businesses make the best decisions regarding compliance efforts using the history of customer transactions.

What’s next?

To implement the robust screening and monitoring process, businesses must opt for solutions that produce fewer false positive results. 

The higher the rate of false positives, the real threat goes unnoticed, and businesses may have to face fines and penalties.

What should businesses do, then? Choose the best. Choose AML Watcher, one of the best AML ongoing monitoring software in town. It keeps its database updated every 15 minutes and provides zero false positive results. Its user-friendly interface makes your compliance efforts easy.

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