AML transaction monitoring helps in identifying suspicious activity in the transactions. But, AML screening helps identify any entity/customer/party that is a part of any regulatory lists or blacklists.
AML or Anti-money Laundering transaction monitoring facilitates a wide range of benefits for banks and financial institutions. It won’t be wrong to say that several suspicious activities in bank transactions have been linked to terrorist activities in the past. With criminality and criminals getting access to hordes of money, it is not only dangerous, but also incredibly disastrous.
Thanks to the advent of technology, modern bankers and financial institution owners have a sound way to identify frauds and terrorist financing activities and more. With an aim to complete due diligence, these financial organizations prevent and deter any kind of financial crime. However, considering the difficulties intertwined with this process, especially in terms of time, resources, and cost, it might not be possible to eradicate these criminal offenses.
Therefore, financial & banking institutions pursue a risk-based approach to identify and understand customers. This helps in mitigating any kind of potential risks associated with financial crimes. Steps like KYC screening also serve a significant way to analyze customer profiles and predict future activity, raise alerts, and generate reports. Based on their risk-levels, created alerts help the officials to prevent misuse of their platform.
Transaction monitoring includes blacklist screening, customer profiling, customer screening, denied party screening, and many more. If a customer or party is found to be suspicious, then it red-flags the situation and creates an alert. Analysis of customer profiles serves a variety of purposes, which includes anti-money laundering, counter-terrorist financing requirements, and suspicious activity reporting. Similarly, other kinds of reporting obligations follow.
How Does AML Screening Help?
We know that suspicion theories might give a twist to what happens. Some of the companies do not believe in these theories and continue working with their partners without learning any of their historical information. This may jeopardize an organization’s reputation, in particular. When an organization doesn’t follow the standard practices of being trade-compliant, then it is making itself vulnerable by various means.
Any customer following through a company’s product or service may find them unreliable for business or any other commercial transaction. If that’s not it, any kind of penalization for non-compliance with trade or export regulations harm a brand’s reputation. Thus, it automatically eliminates the faith of a customer on a brand or company. Hence, the organizations should consider this facet of screening seriously.
Comprehensive AML screening helps in the following:
Customizable risk screening of different parties against global sanctions, watch lists, politically exposed person lists, adverse media, etc.
Smart screening methods facilitate the avoidance of false positives and identifying potential risks positively.
Real-time monitoring of high-risk transactions and suspicious activities, furthering investigations and rapid reactions.
If an organization fails to equip itself with an agile and solid software like this, then they might be committing grievous mistakes of their lifetime. Hiring a trade compliance consultant or expert in these matters would help.
Linqs Inc writes about the crucial topic of AML screening and highlights the need for it, especially for a banking or financial institution. He explains how KYC screening and customer screening mitigates potential risks in the long run. This software identifies suspicious parties and activities, helping organizations to fall prey to financial crimes.