There has been a constant war between money launderers and financial institutions. Amid digital transformations, the criminals have become digitally equipped with online threats as their weapons. Criminal conduct data breaches, identity theft, account takeover, money laundering, and keeping UBOs secret to bypass the authenticity checks and reaps illegitimate benefits. As per the UN estimates, over $800 billion money is laundered every year, among which 90% is still undetected. These activities demand the need for financial institutions to come up with more enhanced AML solutions.
Therefore, financial institutions should employ sophisticated and digital anti-money laundering solutions to combat financial crimes effectively. This way financial institutions can ensure regulatory AML compliance as well as prevent chances of criminal invasion. This will ultimately help them to guard their reputation, prevent customers’ dropoff, and minimize the chance of hefty penalties. Shufti Pro Funding indicates that the artificial intelligence-based services are shielding financial institutions by providing them with various solutions enlisted later on.
Digital AML Systems – Providing Financial Institutions with AI-powered Solutions
Artificial intelligence is the game-changer in the IDV world. It has enabled financial institutions to come up with more strict and authentic checks while onboarding customers. So much so, that they can detect fraudulent activities in time. AI-powered AML screening has minimized the hassle for both the customers and businesses.
Customers can simply take pictures of their documents and upload them along with a real-time selfie and the system will verify the identities in minimal time. Below are some of the solutions that AI has provided to the financial situation in wake of preventing money laundering and terrorism financing.
Ensures Enhanced Due Diligence (EDD)
Enhanced Due Diligence refers to the improved and broader analysis of company-to-customer relationships. It is crucial for businesses because it detects the up forthcoming threats that Customer Due Diligence is unable to do. However, both EDD and fall under the KYC process. EDD refers to the process where businesses can verify identities while evaluating the risk involved in onboarding.
Enhanced Due Diligence offers various procedures including a risk-based approach, monitoring the transactions, evaluating customers’ profiles, and adverse media, and constructing an ongoing risk-based evaluation strategy. AI-enhanced EDD and AML monitoring allow financial institutions to develop a holistic view of customer activities. It also helps financial institutions to come up with more improved, enhanced, and accurate strategies.
Identifies the Ultimate Beneficial Owners (UBOs)
Ultimate Beneficial Owners (UBOs) refers to the entity that owns or controls a client or is the real customer on whose behalf the transaction was carried out. In case of lack of disclosure of the potential UBOs, criminals pave the ways to conduct money laundering and terrorism financing. Therefore, financial institutions need robust AI-driven AML solutions to keep track of UBOs and identify them in time. As per set requirements, the UBOs should be identified prior to transactions and fund transfers.
The financial institutions conduct identification and validation of UBOS during registration and account opening. The system requires asking the account holder to declare the UBOs. If their changes are even minimal, the customer is obliged to inform the respective institution.
Provides Continuous Monitoring of Transactions
As per Shufti Pro News, financial institutions access and control billions of transactions ongoing every minute. In the previous years, traditional methods were tricky, time taking, and more prone to threats which is why financial institutions need automated AML systems. Furthermore, financial institutions need to monitor transactions periodically to comply with regulatory obligations.
Conventional AML checks consider outdated because they involve high chances of false or mistyped entries, operational workloads, and fake alerts. Also, the cost involved is often unaffordable. Therefore, AI-enabled solutions are less risky, involve less error, take less time, and above all are cost-effective.
Ensures Regulatory Compliance and Stay Upto the Mark in Case of Changes
AI-driven AML monitoring services are capable of evaluating a vast amount of transactions. This way, these solutions ensure industries’ compliance with regulations and in case of even minor changes, businesses won’t be left off. Also, they can minimize the chances of hefty penalties by verifying customers and monitoring transactions in real-time. enables it to form an understanding of the ever-changing regulatory environment. The AI-backed services validate documents by extracting required information through OCR and ensuring authentic identity checks.
Improves Customers Registration and Verification
Digital advancements, stringent regulatory standards, and transforming customer expectations have compelled financial institutions to incorporate better management strategies. This is so to enhance customer experience, ensure compliance, and generate high revenues. Legit customers’ onboarding has become complex and tricky because manual verifiers not consider reliable. On the contrary, financial institutions need automatic and AI-enabled KYC verification methods that leverage encrypted technologies.
In a Nutshell
The anti-money laundering regulatory landscape is ever-changing compelling the financial institutions to speed the verification processes. AI-backed AML solutions help institutions to detect and deter money laundering, identity theft, terrorism financing, account takeover, and other financial crimes. Ultimately, financial institutions can satisfy AML compliance and ensure an improved customer experience.
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