The whole world is undergoing ever-evolving advancements while demanding financial institutions incorporate strict guidelines. Criminals are using improved methods to change their illegitimate funds into white money. For this, they commit crimes like money laundering, terrorism financing, smuggling, and illegal transactions. All of this happens when criminals use fake identities and documents to bypass the anti-money laundering and verification process. Ultimately, criminals affect the financial industries as well as the whole of the economy.
Therefore, financial institutions need to put robust AML solutions in place. Firstly, to restrict criminals from illegitimate registration, secondly to ensure compliance, and lastly to detect and deter suspiciousness. Moreover, regulatory authorities are imposing strict AML compliance standards to counter financial crimes. For instance, 6AMLD by FATF and POCA in the UK. There are more regulators responsible for tracking money laundering and terrorism financing covered in the blog along with the industries they monitor, later on.
AML Verification – Global Enforcers Responsible for Deterring Financial Crimes
Ficnnaicl criminals leave negative impacts on the economy due to their illegitimate actions. They make their black money undergo legal banking procedures which makes it look white. Afterward, they withdraw the funds and use them for any purpose they want. Therefore, it becomes tricky for financial institutions to conduct accurate AML verification. In the case of digital operations, the situation has gone worse. Similarly, one-time verification of customers during registration is not enough.
According to Shufti Pro News, financial institutions need to strictly enforce AML regulations and keep a continuous check. The authorities legally oblige the banks and other financial firms to keep track of customers’ money-involved activities and report suspiciousness. Below are some of the major regulatory authorities.
The UK’s National Crime Agency (NCA)
Similar to the rest of other authorities like FATF, the National Crime Agency (NCA) along with the Serious Fraud Office (SFO) is responsible to address financial crimes. They have the power to document, amend, and enact financial regulations in the UK. Both of these institutions have the authority to seek warrants from the court in case of serious crime. So much so, that they can also arrest the offenders.
Furthermore, NCA and SFO can not only conduct AML monitoring but also confiscate any accounts, credit/debit cards, properties, or other assets. These are the globally operating authorities which makes it easier for them to access global databases. Hence, they can track down the criminals ultimately minimizing the chances of financial crimes in near future.
Financial Conduct Authority (FCA) – The Primary Regulator
The FCA’s major responsibilities are to oversee banks and financial firms, and credit unions, and to monitor other financial institutions. It was made in 2012 in accordance with the Financial Services Act in the UK. Moreover, FCA mandates banks to conduct robust AML verification to ensure the safety of customers and the economy. Furthermore, it carries out investigations against the offenders in alliance with law regulatory agencies.
Her Majesty’s Revenue Customs (HMRC) – Monitors Compliance
As FCA works in collaboration with legal law enforcement agencies, HMRC assists FCA in investigating financial crimes. Moreover, HMRC enacts guidance regarding AML compliance to the financial institutions. Also, it ensures that banks and other financial firms are complying with the regulations and UK laws.
AML Screening – Industries Monitored by the Regulatory Authorities
After the rapid shift of operations from traditional to digital, industries involving money-realted matters need improved AML solutions. This is because criminals are using advanced technologies to exploit illicit benefits. However, the authorities mentioned above keep a regular check on the below industries to make sure they are complying with the regulations.
AML Regulations and Monitoring for the Banking Sector
Similar to capital markets, banks are also going digital by incorporating advanced services. This way they ensure compliance, reduce false alert rates, and timely detect and report suspicious activities. Ultimately, they ensure customer due diligence and verify customers accurately.
AML Regulations and Monitoring for the Retail Industry
Criminals do not just use banks to launder their illegitimate money, they also do this by using store-front businesses or websites. This is why retail is increasingly becoming an attraction for financial criminals. This is why regulatory watchdogs are constantly supervising the retail industry.
AML Regulations and Monitoring for the Insurance Firms
Financial criminals are exploiting insurance firms as well as other industries. They apply for insurance, buy it, and later retrieve funds. By repeating the process of moving money in and out, they form a pattern that makes their money look legit. Therefore, monitoring authorities are imposing strict anti-money laundering regulations on insurance firms as well.
In a Nutshell
Regulatory authorities are established for a reason and they have to monitor financial institutions as their prime responsibility. These authorities ensure that banks and other money-involved firms are satisfying AML compliance. With enforcers enacting stringent regulations, financial institutions also require robust AML solutions. Shufti Pro Funding indicates, that these solutions minimize the chances of hefty penalties.