Anti-Money Laundering (AML) checks

Mark Halstead Compliance

Anti-Money Laundering (AML) checks are an unescapable part of doing business today. Financial institutions and public bodies use them widely to comply with their Know Your Client (KYC) obligations, but other companies also conduct a range of checks to protect their interests.

AML procedures form part of the customer due diligence and employment screening process for many organisations, and are intended to identify and prevent criminal behaviour. Anti-money laundering itself refers to the body of legislation that seeks to prevent bad actors from disguising illegally obtained funds as the legitimate proceeds.

Here we outline the primary AML Regulations and outline how businesses can meet their legal obligations.

What are the AML Regulations?

The Anti-Money Laundering regulations are the primary source of AML legislation in the UK. They set the standards that businesses must follow when completing anti-money laundering checks, and prescribe a number of steps and controls that organisations should take to meet their AML compliance obligations.

One key provision of the AML regulations is the need for certain businesses to appoint a senior employee to the position of Money Laundering Reporting Officer (MLRO). The appointee will then be tasked with leading the organisation's approach to AML policies, and must report any suspicious behaviour to the Financial Conduct Authority (FCA) and other relevant bodies.

What are AML Checks?

Aside from appointing an MLRO, the AML regulations require all businesses and financial institutions to take sufficient steps to combat fraud and identify

Anti-Money Laundering checks can take various forms depending on the type of business and the specific nature of the transaction involved. In broad terms, they can encompass anything from identity verification checks through to reviewing the electoral roll and even carrying out enhanced due diligence to identify Politically Exposed Persons (PEPs) and sanctions.

Alongside checking identity documents and reviewing publicly available information about individuals, organisations should also be alive to the risks of money laundering throughout all their dealings. This means they should mindful of any potentially unusual financial activity, including:

  • Large cash transactions
  • Multiple unexplained transactions
  • Transactions that are linked to high-risk jurisdictions
  • Transactions that are unexplainable or make no commercial sense
  • Transactions that involve suspicious individuals or businesses.

 

Why are AML Procedures so Important?

While AML checks and procedures are a legal obligation for many organisations, their significance stretches far beyond upholding the law. Businesses that fail to meet their legal obligations could be met with substantial penalties, and the regulators are keen to encourage a proactive approach to AML compliance.

Firms that are not convinced that compliance is important need only to look to the many estate agency firms that have been fined up to £25,000 for failing to conduct the necessary AML checks on their customers.

Outside of financial penalties, businesses that do not conduct the necessary checks on their customers could suffer from reputational damage and even criminal sanctions. This is a price that's simply not worth paying, and so all organisations should review their policies to ensure they are actively monitoring for any potential criminal activity.

AML Checks Made Simple

Money laundering poses a major dilemma for organisations of all shapes and sizes, with figures from the National Crime Agency suggesting that it costs the UK economy over £100 billion each year. While the regulations can seem quite complicated, there are AML solutions available that reduce the burden on businesses by meeting all necessary legal obligations.

Red Flag Alert's AML service is the simple answer to this complex issue, and can help firms to monitor for suspicious activity without disrupting their everyday commercial activities. Businesses that incorporate it into their new or existing compliance regime can count on:

• A full range of risk level checking

• Unbeatable match rates

• ID verification

• Enhanced due diligence

• Sanctions and PEPs real-time screening

• Monitoring alerts

• User-friendly interface

• Secure audit trail

For a better approach to AML compliance, contact Richard West at richard.west@redflagalert.com or on 0344 412 6699.

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Mark Halstead Mark Halstead Partner

Mark's experience is big data analytics, financial services and building businesses provides Red Flag Alert with strategic direction.

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