What is Anti-Money Laundering?
Money laundering is a financial crime. It is usually conducted by criminals who are trying to hide or misrepresent the origins of their money, disguising their illegal profits as legal or legitimate.
According to the International Monetary Fund (IMF), the United Nations has estimated criminal proceeds laundered annually contribute between 2 and 5 per cent of global GDP, which is equivalent to US$1.6 to US$4 trillion each year.
Anti-money laundering (AML) refers to policies, laws and regulations to prevent financial crime and to stop criminals from disguising illegally obtained funds as legitimate income.
AML is commonly discussed alongside counter-terrorism financing (CTF), which includes financial transactions or activities for the purpose of supporting terrorists and terrorist organisations. AML and CTF activities could include transactions such as travellers cheques, money orders, shares and bonds.
In Australia, the Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia's AML/CTF regulator and specialist financial intelligence unit. AUSTRAC is the policy agency responsible for the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), which was developed to regulate industries and businesses that are more prone to money laundering or terrorism financing activities among their customers, such as banking or gambling.
In New Zealand, the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) similarly aims to ensure local financial institutions (FIs), accountants, lawyers, and other relevant professionals and organisations are taking appropriate measures to safely and securely do business.
According to AUSTRAC, there are five main requirements of relevant businesses to comply with the AML/CTF Act:
- Enrolling with AUSTRAC
- Establishing and maintaining an AML/CTF program – businesses should be actively identifying, mitigating, and managing AML/CTF risks and activities
- Customer due diligence – this is the process of ensuring a business knows who they are doing business with and generally involves secure and diligent processes around collecting and verifying customer information
- Reporting – as suspicious activities occur, businesses may need to inform AUSTRAC for their own tracking and management purposes
- Record keeping – this includes keeping records of the AML/CTF program, as well as customer information and transactions
Compliance with AML regulations
Organisations need to comply with AML regulations in the country they are based in, as well as the countries they do business in.
As regulations around the world continue to evolve, it is important for businesses to have the right technologies and measures in place to stay updated. Failure to comply could have significant consequences. AUSTRAC notes, “Countries’ failure to meet these international standards can lead to negative commercial consequences, including reductions in investment levels, as well as countermeasures and sanctions against the country.”
How technology can help businesses with AML
As financial criminals become increasingly well-resourced and sophisticated, businesses and financial services organisations need to ensure they are taking proactive steps to identify, mitigate, and manage AML.
The best AML solutions, like we provide at GBG, have capabilities in artificial intelligence (AI) and automation technologies. This enables businesses to automate their security processes and identity verification checks, while also ensuring they are staying compliant.
A key business challenge is balancing the use of new technologies and implementing efficient ways to stay compliant, while also delivering a smooth customer experience. Businesses need to find ways to gather and verify customer information quickly, and also stay secure and vigilant against the latest threats. Technology can help businesses to create a frictionless customer experience so they can easily and quickly use a product, without worrying about the checks and compliance-related activities happening behind the scenes.
GBG products that can help you with AML
GBG’s Identity Solution can help you to stay on top of your regulatory requirements wherever you operate and give you a competitive edge as a leader in compliance.
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