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Updated by Oliver Smith on Jul 25, 2019
Headline for Compliance Strategy for Business
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Compliance Strategy for Business

A business should stay compliant with regulations to prevent hefty fines from regulatory bodies and to increase profits. A customer should only deal with KYC and AML compliant business to secure his identity.

RegTech facilitates effortless AML Compliance - Shufti Pro

RegTech industry is expected to grow to USD 12.3 Billion by 2023. How will effect the growing cost of AML and KYC compliance?

The AML Compliance Strategy that can Save $26 Billion for the Financial Sector

AML Compliance solutions like Shufti Pro are capable of saving billions of dollars for banks allowing them to avoid massive fines due to noncompliance.


Smaller Banks are in dire need of AML Compliance to avoid fines

Smaller Banks are in dire need of AML Compliance to avoid fines

Smaller banks are being considered an easy target for money laundering activities because of their smaller base of operations and little to no regulatory oversight for their account holders, increasing the need of AML Compliance. It has been recently revealed by Mr. Jesper Berg, head of Denmark’s official watchdog tasked to oversee banking operations around the country. He made this claim after country’s biggest bank was found to be used to perform billions of dollars worth of money laundering. This money laundering activity was being performed by not some criminal elements of Denmark but financial criminals from Russia, Azerbaijan and Moldova used country’s largest bank Danske Bank A/S to carry out money laundering of nearly 8 Billion USD.

Why Smaller Banks are at risk?

Smaller Banks, even in highly regulated economies, are vulnerable to money laundering activities because of the nature of their operations. Financial regulators have already seen trends where smaller but frequent transactions are used to launder money on behalf of criminal elements. Even in the above stated case, USD 8 billion worth of money laundering was done from 2007 to 2015. So the smaller banks, with moderate assets and not so large banking operations are neglected, or at least not vigilantly monitored by financial regulators across the globe for AML Compliance. This creates a window of opportunity for money launderers and financial criminals to whitewash their funds using multiple accounts in branches of smaller banks in moderately populated cities where the staff might not have much understanding of AML compliance

Anonymity of these far off branches and even smaller size of bank creates opportunities that can be easily exploited by financial criminals even before any unusual activity comes on the radar of financial regulators tasked with AML compliance. This is a perfect example of flying under the radar without being noticed for an extended period of time. A string of such banks accounts can create a paper trail that can not be easily identified in the haystack of a country’s banking sector.

Another factor that leads to the smaller banks being exploited for money laundering activity is their lax approach towards AML compliance. Not only shortage of funds lead to this approach but the typical customer base of such banks also require them to be not vigilant about the kind of transactions being performed from the banks’ accounts. In a world where major banks are spending billions and are staffing hundreds of employees in their AML compliance departments, smaller banks find it hard to allocate such huge resources to ensure compliance with AML guidelines set forth by national regulators.

AML Compliance for Smaller Banks

But as a legitimate business operating within the territorial boundaries of a country, the mere small size or insufficient resources of the banking organization does not serve as an appropriate excuse for being used as an accessory to a crime like money laundering. A bank found involved in money laundering activities, even unwillingly, risks to be fined multi million dollars in regulatory penalties that for sure is death blow to the operations of such smaller banks. It means that money laundering is a genuine cause of concern not only for larger banks but smaller banks are even at greater risk if found to be in breach of AML Compliance.

So in the absence of satisfactory monetary resources and keeping in line with a futuristic vision, fintech turns out to be the only savior for smaller banks around the globe. There are many AML Compliance solutions available around the globe that can enable smaller banks to follow AML guidelines of their national regulators without spending a fortune on compliance departments.

Shufti Pro is an ideal choice for smaller banks, no matter which part of the world they are operating in. It is an Artificial Intelligence based end-to-end verification services provider that is offering KYC as well as AML Compliance to a worldwide clientele.

It has a huge data bank comprising of 1000 Watchlists and sanctions list in addition to data from 3000 databases maintained by national, regional and international watchdogs. This vast databank is updated every 14 minutes and a small bank will be playing a very small amount to ensure AML compliance against their customer base.


Asian Banks push for greater Fintech to cut down AML Compliance cost

Asian Banks push for greater Fintech to cut down AML Compliance cost

Asian Banks are now asking their regional and national regulators to allow more fintech in order for them to cut down AML compliance costs. Recent months have seen regulators and financial watchdogs – especially in Far East and Southeast Asia – slapping huge fines and tightening overall AML guidelines. Both these measures have an impact of double edged sword for the revenues of Asian banks that simultaneously dwindled in the light of multi million dollar fines and compliance costs. This is the reason why banks are looking to employ cheaper yet effective fintech to perform AML compliance in place of large swaths of compliance staff.

AML Compliance Costs:

Asian Banks have millions of accounts, tens of thousands of bank branches and billions worth of american dollars being transferred on daily basis. This huge scale of operations demand an equally huge workforce to ensure compliance regarding AML guidelines issued by financial watchdogs and regulators. On average, in 2017 there were 307 employees tasked to make operations of a financial institution compliant with AML guidelines applicable in this region. This is more than 4 times the number of employees that were working on average in a financial institution to perform AML Compliance in 2016.

HSBC, one of the major Asian banks having strong presence in the region, spent in excess of USD 3 Billion, just in 2017 for AML compliance and tripled its human resource in the span of 4 years. It has now 8600 employees on its payroll only performing compliance based operations.

What Fintech can do for AML Compliance?

Right now, fintech is the only logical and workable solution for Asian banks to cut down cost on compliance measures without seriously affecting their crusade against money laundering activities. Despite a large number of AML Compliance staff, financial criminals have been able to find out ways to circumvent AML Compliance measures of these banks, leading financial regulators to fine huge monetary penalties over these banks.

In a recent case, Commonwealth Bank of Australia was fined hundreds of millions of dollars by Austrac when it was find out that thousands of accounts were not being monitored under AML compliance guidelines of financial watchdog. Fintech can defeat both known and unknown money launderers and can detect suspicious transactions in far less time as compared to a human staff of compliance officers. Automated systems developed by Fintech can run background checks in a few minutes to check the past transaction history. In case of an usual amount of online funds transfers, a 24 hour vigilant AML Compliance solution can redflag the account for the banking staff.

Why regulators are reluctant about Fintech?

Well there is no stated or on-the-record resistance shown by regulators for introduction of fintech in order to provide AML Compliance. Infact, financial watchdogs have been encouraging about the use of fintech in banking sector and financial institutions. But they always require banks to utilise technology and manuals that are pre-approved by the regulators for use in banks and financial institutions. This creates a bottleneck to gain approvals for fintech given the limited technological expertise of financial regulators and even smaller number of individuals tasked with approval of fintech. Bureaucratic behaviours and red-tape slows the process of approval of fintech, thus forcing banks and financial institutions to employ higher number of workers and spending millions of dollars while fintech software spend months and months in approval grind mill.

Best Solution:

When it comes to fintech for AML Compliance, there is hardly any match of the Artificial Intelligence backed Shufti Pro. It is an end-to-end ID verification SaaS product that provides a comprehensive suite of verification services and one of them is AML Compliance. Shufti Pro has gathered a large databank to perform background checks for AML Compliance. This huge dataset contains information from 1000 Watch lists, Sanction lists and Politically Exposed Persons list. In addition to that, individuals and enterprises present on 3000 databases of international watchdogs are also part on this databank.

Shufti Pro makes sure that every new customer of a bank or financial institution is checked against this vast databank to ensure that no person red flagged in any part of the world for his/her involvement in financial crime, becomes part of bankroll or account list.


Customer Due Diligence Checklist – Is Your Business fully Compliant?

Customer Due Diligence Checklist – Is Your Business fully Compliant?

Compliance regulations can be a challenging task for the financial services sector and fulfilling them can be a long and tedious process. But no matter how onerous the process may be, the costs of non-compliance can be detrimental. Thus the financial services sector must exercise a comprehensive CDD or Customer Due Diligence Checklist. Under the global compliance regulations, every company providing financial services is obliged to perform identity business verification of its clients during the onboarding process.
The customer due diligence process can vary depending on the nature of the account and the client. To simplify the procedure, therefore, companies should adopt a risk-based approach. This allows them to verify their customers based on the levels of risk they pose to the company. For example, a person opening a simple low deposit account may need some basic document verification at the time of onboarding. On the other hand, a beneficial owner of an offshore entity or a person having a high-risk business needs to be subjected to an enhanced due diligence process.

Customer Due Diligence Checklist – Steps towards a Better Compliance Structure

The real question then is that what steps should be taken to establish an efficient due diligence checklist. A simple customer due diligence checklist that banks and financial services can go through to make sure their CDD procedures screen through every sort of risk can include;

Build a Basic Screening Process to Weed Out any Obvious Levels of Risk

Building a basic verification procedure can ensure that there is no obvious fraud involved. This process may involve asking for a person’s ID information including full name, date of birth, address, along with some essential identity documents like an ID card, passport or a driver’s licence. It is also advisable to perform an address verification check by asking for the client’s recent utility bills. These Know Your Customer or KYC checks can help the company weed out any kind of identity fraud and determine if the person is trying to impersonate someone.
Additionally, at this point, it is also advisable to check for any beneficial owners (BO). In case there are any, make sure to get their details as well and the relationship between the BO and the customer. Moreover, perform an AML check to make sure that the customer is not exposed politically.

Vet Your Third Parties to Enhance the Process

Performing the entire CDD process on your own is impossible. To verify a customer you have to rely on third-party databases, banks, lawyers and auditors. It is important to choose outsourced service providers after proper research and due diligence.

Assess the need for Enhanced Due Diligence

For high-risk clients, the process of enhanced due diligence is very important. EDD involves collecting more information using customer risk assessments. Due diligence EDD can be an ongoing process and can be implemented for the entire period of time the client stays with your firm. It is performed by setting up some warning signals in your system to become aware of any threats or risks to your system immediately. Some alert signs that can help you through may include; the type of risk associated with the client’s transactions; their occupation; their address; and the type and value of their transactions.
All these red flags can enable you to assess whether your client is getting involved in money laundering or any other financial crimes. They will help you to timely assess any risks to your firm and take the appropriate action accordingly.

Make Sure you Comply with Data Protection Regulations

Performing customer due diligence is only a part of your responsibility. You must also make sure that every shred of data you collect from your clients is protected and secured. Moreover, GDPR also demands that any entity collecting customer data is also liable to protect it as well.

Keep Your Data Saved Digitally

Make sure all customer data you have is saved digitally and can be produced for proof if or when needed. Securing all CDD and EDD data is not only smart but a necessary regulation from any global regulator. Since any government can ask for client data in case of suspicion of money laundering or corruption, every firm is liable to be able to provide documented proof of their clients’ transactions.

A Customer Due Diligence Checklist can allow banks to implement a comprehensive compliance process. Due diligence CDD is a part of your AML compliance checklist. Shufti Pro is a leading data verification service that provides customer identification as well as business verification service. It provides KYC/AML for security compliance for companies looking to verify their clients through identity checks and AML screening.

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In the first quarter of the year 2018, the Swiss Financial Market Supervisory Authority rolled out an amendment to their existing policies regarding Digital Identification and Verification services opted by all the organizations within the Swiss region. The major changes pertained to the Online and Video Verification milieu and due diligence procedures.


EU’s 4th AML Directive Aims to make the Payment Ecosystem Crime Free

EU’s 4th AML Directive Aims to make the Payment Ecosystem Crime Free

On June 26, 2018, the European Union landed the fourth AML directive that is targeted at combating cryptocurrency crimes.

With the new EU AML directive in place, it is deemed that crypto-related crimes shall take a serious hit. Being an unregulated currency, crypto money poses a high risk of frauds entailing money laundering, identity theft and terrorist funding. Therefore, this directive might just be that ray of hope regulatory authorities awaited.

What Do New EU AML Directives Bring to the Table

The new rules imposed by the EU serve to better explore and comprehend the risks associated with cryptocurrencies, enhance the communication between the Financial Intelligence Units (FIUs), and imposing all-inclusive monitoring on high-risk transactions, especially those originating from third-world states. This would maintain the integrity of the region’s payment system, while impeding the efforts towards terrorist financing and money laundering.
Around forty new suggestions by the Financial Action Task Force (FATF) have been incorporated in the new directive. It has been decided that along with the EU, the EBA, ESMA (ESAs) and EIOPA will also be taking risk assessment and combating measures.

Implementation of the Stricter Side of Rules

An alert and active checking on cash transactions amounting to ten thousand euros has been implemented. This limit has been brought down from fifteen thousand euros. Any transactions exceeding the aforementioned threshold will be considered as ‘obliged entities’. This comes under the extended AML regulations that now place wider range of restrictions on monetary exchanges that are over a particular amount.
Real estate agents have also had to face the extended rules applied by the EU. These are not just applicable to the dealers who buy and sell properties; even those who sublet the properties are also placed under the microscope. It will ensure no business is contributing towards terrorist funding and any illicit activities.
This restriction is not limited to cash exchanges and real estate agents only, rather, gambling companies were placed under scrutiny as well. Providers of such services shall be ranked as obliged entities as well and can be removed provided they pose a medium-high money laundering risk. Only low-risk providers shall be deliberated over and may be allowed to stay in business.

EU Member States Jump up to the Mark

All the states that come under the European Union are obligated to create and maintain central registers wherein the details concerning the ownership of Anglo-American trusts and various corporations are logged.
This ensures that the transparency rate with regards to the data for beneficial ownership of organizations remains high, and the quality of the same becomes superior.
Access of this information shall be available to the Financial Intelligence Units (FIUs) so Customer Due Diligence may be ensured, under the revised and extended AML legislation requirements.
Furthermore, in order to gather information about the Anglo-American trust structures, certain individuals and corporations may also be allowed to access the data present in the central registers.

Effect on Compliances and Global PEPs Lists

With an expanded scope of the fourth AML directive in place, the number of people considered out of line as also increased. This means that global watch lists, sanctions lists and PEPs will have to be updated to include individuals who are a part of governing bodies of various political parties.
It is stated in the revised regulation that financial institutions like banks, investment firms, and other institutions will comply group-wide. Business of all kinds for and with such institutions will be halted in countries where all AML directives and stances taken to combat terrorist funding activities are not complied to.
In addition to that, appropriate measures will be taken against the states that refuse to comply with the AML directive. Aside from the official warning that will be issued to these states in observation of such a legislative breach will include but won’t be limited to a fine of at least one million euros. For banks and financial institutions, this fine would amount to anything greater than or equal to five million euros.


To sum up, along with the previously enforced GDPR rules, the new fourth directive of the AML legislation has brought together the European Union states to work and fight against the terrorist funding, crime financing and money laundering activities. The actions taken against them are bound to have positive effects on the payment ecosystem of the EU, with resource drainage in the right places rather than towards illegal and criminal practices.
In this day and age, it is highly imperative that companies and businesses opt for identity management applications to safeguard their operations against fraudsters and money launderers. Shufti Pro can help enhance security and guard organisations before any losses are incurred.

How does CDD effectively help with AML Compliance? - Shufti Pro

Customer Due Diligence that is otherwise known as CDD in banking and financial vernacular is an important aspect of AML compliance. There are various international regulators that have strict guidelines issued over the years in order to clamp down not only money laundering but to make its harder for funds to be transferred for carrying out terror activities. Some of the major global organisations that have set forth this kind of regulations include United States’ Federal Financial Institutions Examinations Council on Customer Due Diligence (FFEIC) and the Financial Action Task Force’s (FATF)

GDPR Compliance vs BlockChain Debate - Things that you must know

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How Identity Verification Services make Regulatory Compliance Easier?

Financial institutions and banks have ended up in a loop of dumping billions of dollars because of ever-tightening regulatory compliance especially in regards to identity verification services and data protection. GDPR becomes mandatory in next few days for all the companies who want to operate in European Union. There are country-wise data protection and banking compliance regulations that are also needed to be taken care of by MNCs and financial institutions wishing to expand into those markets. FINMA regulations in Switzerland and FINTRAC compliance in Canada are few examples of these country specific guidelines.

Artificial Intelligence can reduce cost of AML compliance by $217 Billion - Shufti Pro

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AML & KYC Compliance - 5 Ways AI is Supporting the Fight Against Financial Crimes

The capabilities of artificial intelligence (AI) are being pushed to unprecedented levels in the past few years. The banking and financial services sector has reaped extensive benefits from the transformation brought on about by AI in the landscape of IT solutions. The Anti Money Laundering (AML) and Know Your Customer or KYC compliance, in particular, has been made more dynamic and effective through AI-enabled systems. The financial sector produces huge amounts of data, which is what AI works best with. It can mine high volumes of data within seconds and produce risk-analysis of clients, that would otherwise take days or even weeks for the compliance staff to produce.

How Brexit Impacts UK-based Identity Verification Companies? - Shufti Pro

Brexit and its ramifications for the UK seem to be the only topic that anyone is interested in Britain right now and even the entire world is looking towards the country – while holding their breaths – in anticipation that what will be the consequences of the divorce between EU. This separation of UK from the European Union will Impact businesses of all sorts, operating within the jurisdictional bounds of the country who have to adapt to the changing free trade agreements between the EU and the UK currently happening.
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