Why should Companies Pay Attention Towards Anti-Money Laundering Checks?

Anti-Money Laundering or AML is the process that makes sure that the legal requirements for financial and other regulated institutions either impede or report money laundering activities. Money laundering takes place in every corner of the world. It is the illegal concealment of black money through foreign banks or legitimate businesses. This usually involves a long and complex chain of transferring monetary transactions. The money is then safely returned to the launderer, concealing the whole money trail.

The AML compliance states that it is mandatory for all companies to adhere to the Bank Secrecy Act (BSA) of 1970 and its implementing regulations. This is important to help in the detection and reporting of suspicious elements such as money laundering and terrorist financing activities.

As per a PwC survey, global money laundering transactions account for roughly $1 trillion to $2 trillion annually or 5% of global GDP. AML rules and regulations were recognised at a global level when the FATF (Financial Action Task Force) was formed in 2001. Since then, efforts are being made regularly at various levels to remove this menace from the basic level. Money Laundering typically involves 3 steps:

  1. Placement: This refers to the transfer of illegal money into a legitimate bank.
  2. Layering: This refers to the masking of the money source through a series of transactions and bookkeeping techniques.
  3. Integration: This is the withdrawal of laundered money from a legal account and its utilisation.

Anti-Money Laundering Compliance

Firms are required to monitor, analyse, and report any incident of financial crimes to the regulatory authorities. A number of techniques should be adopted by companies to screen and resolve money laundering and related hazards. The technological advancement has significantly improvised the AML screening process.

What was initially done over a couple of days is now done in a few seconds thanks to the new technological advancements. Regulatory authorities are now focusing on digital platforms and their use in money laundering. Digital transactions regularly go through stringent checks in order to out rule any sort of illegal activity.

Digital AML Verification Process

Identity verification service providers have developed modern Artificial Intelligence systems that have digitised the whole AML screening process. To prevent money laundering, banks and other businesses use AI-driven anti-money laundering solutions. These solutions screen an individual in real-time against exhaustive databases consisting of global watchlists, sanction lists, and blacklists, issued by global regulatory authorities.

An AI-driven ongoing AML Check works by gathering data from OFAC, DFAT, OFAC, etc, issued standardised global sanction lists, adverse media databases, and criminal watchlists. Artificial Intelligence systems are very accurate and efficient in providing AML screening services.

Methods to prevent Money Laundering

The following are some of the techniques businesses can adopt to prevent money laundering:

  • Conducting Proper Due Diligence

It should be ensured that you know who you are dealing with. For this purpose, it’s important to understand and observe the transactional activities of others and analyse their chances of involvement in money laundering activities.

  • Ongoing AML Check

The Artificial Intelligence (AI) system regularly monitors customer activity in real-time to detect fraud, scam, and as well as money laundering activities.

  • Studying Previous Transaction Patterns

AI is based on machine learning technology. It has to be fed with huge datasets regularly for authentic results. Based on previous patterns, the software can gather and arrange data from a number of datasets and store it in the back-end. The data can then be accessed whenever it is needed.

  • Identifying Politically Exposed Persons

PEPs compliance is obligatory for financial institutions and firms. It is crucial to identify and minimize the risks associated with your clients. According to FATF, any person who is or has been holding any public office or function is a politically exposed person, and to do business with any such entity, organisations should perform enhanced due diligence and monitor their ongoing transactional activities.


To conclude, it can be said that AML screening has a number of advantages for any business that has chances of being affected by money launderers and their activities. In this time, it is highly crucial to create a safe environment from fraudulent and illegal monetary transactions. Therefore every business must try its best to comply with the rules and regulations set by the financial regulatory authorities to better ensure a fraud-free financial environment.

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