Financial crime in the UK is on the rise.
A recent report by the UK’s Treasury Select Committee found that the UK’s law enforcement is not up to the job of tackling financial crime.
The Committee found that it is easy for financial criminals to launder money through UK companies.
This represents a huge threat for businesses that are subject to AML regulations. Money launderers are everywhere and companies bear responsibility for making sure they don’t channel dirty money.
The rise of e-money and digital money transfers have made this even more challenging. It’s often harder to know who you are doing business with.
The best way to protect your business is to ensure that you have a platform that can perform AML checks and meets all regulatory requirements.
But with so many solutions on the market how do you know how to choose the right one?
This article explores the dangers of failing to comply with AML regulations and lists the factors to consider when choosing an AML platform.
929 UK companies had been involved in 89 cases of corruption and money laundering, worth £137bn by 2019 alone. By now, this number will have increased.
These are only the reported cases — the number of businesses caught up in financial crime that have gone undetected is likely to be far higher.
The impact of this on the UK economy is huge. According to the National Crime Agency, money laundering costs the UK economy 14.5% of its GDP every year.
To protect you and your business you need to:
If you fail to meet these requirements then you could be subject to a penalty or even a prison sentence.
Not only will this cost you money, but your professional reputation will be ruined as well.
There have been several high profile cases recently, including:
While every business has different AML requirements, these are the main factors you should consider:
Having the right features is critical. Many solutions claim to offer a complete AML package, but will only support one or two areas.
A comprehensive AML platform will include:
On average, companies in the UK spend between £186.5 million and £300 million on AML compliance each year. And these costs are predicted to grow due to increasingly complicated requirements and steeper penalties for non-compliance.
Consequently, your AML solution should help you reduce these costs, rather than add to them.
Some ways that an AML platform can save you money include:
AML regulations are continuously updated and new ones are added as money laundering risks evolve. Consequently, AML solutions should help businesses comply with current and future regulations.
Some major regulations include:
There are also upcoming amendments to The Money Laundering and Terrorist Financing regulations expected to be announced in March 2022.
To ensure seamless workflows and increase employee productivity, it’s vital that an AML platform can integrate with a business’s existing technology through APIs.
For example, you can easily run CDD checks through your Customer Relationship Management (CRM) system if your AML solution integrates with it.
When choosing an AML solution, businesses have the choice between on-premises or cloud software.
In general, on-premises software offers a business greater control which may be necessary for certain companies. However, this option can also result in slow updates to new regulations. As a result, your business will be more exposed to AML risk.
Cloud deployments provide businesses with less control but are much quicker and easier to implement than on-premises options. On top of this, the solution provider will often take care of the software’s maintenance and updates.
Many AML solutions make mass updates to their database once per week. This risks missing vital changes in a client’s risk profile. You should look for an AML solution that provides real-time data updates and allows you to monitor clients and set alerts when something changes. This allows you to take action as soon as something changes.
Knowing whether your AML processes are suitable is challenging. The best AML platforms will also offer AML consultancy, providing you with an audit of your existing systems and advice on how to improve them. They will also provide training for your designated compliance officer and teach your staff how to spot the signs of fraud and how to use the AML platform.
Once you’ve made a shortlist of platforms, it’s time to narrow them down. Here are a couple of things you can do to make a good decision:
Try to get a comparison of features for each platform. This allows you to see which one will suit your business. The best AML platforms will be proud to compare themselves against their competitors. This is a sign that they are confident in their system’s capabilities or that it offers a full range of capabilities.
Most providers will offer a free trial or at least a demo so you can get a feel for the system. This will usually put you in touch with a salesperson, so this is a great chance to ask any questions you might have about the system and how it can meet your requirements. Evaluate the system, but also evaluate the salesperson: can they answer all your questions? Can they speak credibly about AML regulations? Do they try to understand your requirements? This will tell you a lot about the quality of service that they offer.
Complex AML and KYC regulatory changes make it difficult to choose a platform to manage your compliance.
With Red Flag Alert’s solution, your business will be ready for any regulatory changes.
Red Flag Alert’s AML solution can help:
Learn more about how Red Flag Alert can help your business stay compliant with our AML checks solution or request a demo to see it for yourself.