Failures in compliance processes cause firms to face heavy penalties, criminal proceedings and sanctions.
Unfortunately, many firms keep making the same compliance mistakes and struggle to meet their regulatory obligations despite the repeated messages in these enforcement cases. The enduring problems reflect a lack of resourcing and the reliance on legacy systems that can’t keep up with the changing trends in financial crimes.
Fintechs, banks and credit unions, broker-dealers, lenders, cryptocurrency providers, marketplaces and other regulated organizations have had to cobble together several different point solutions — sometimes 10 to 20 of them — to combat financial crime and meet compliance mandates.
This is not surprising since there are many ingredients to AML compliance, including:
KYC Compliance: Know Your Customer (KYC) is the process of gathering data, verifying the identity and understanding the risks associated with doing business with a particular customer. KYC also encompasses customer due diligence (CDD), which is the process of assessing the risk both during the onboarding process and on an ongoing basis.
Transaction Monitoring: Transaction monitoring refers to monitoring customer accounts and activity for illegal behavior, and it is a primary tool in helping to detect and prevent money laundering and terrorist financing.
Case Management: Case management is the critical step where analysts at regulated organizations review and investigate suspicious activity that was detected by the KYC or transaction monitoring system.
SAR Filings: FinCEN requires financial institutions to file Suspicious Activity Reporting (SAR) forms, and modern case management systems can pre-populate these forms and electronically file them with the appropriate regulator.
Each amendment and law adds a layer of complexity and burden to the compliance teams of regulated institutions. The complexity is aggravated by the number of different solutions that need to be managed and orchestrated to satisfy different aspects of these regulations.
Time for a More Holistic Approach
Reducing this complexity was our motivation for acquiring Beam Solutions’ AML platform. Put simply, we wanted to create the first end-to-end identity verification and compliance solution. Now, firms can use Jumio’s KYX Platform to manage compliance throughout the entire customer journey, from onboarding to ongoing customer due diligence, transaction monitoring, case management and automated SAR reporting.
The aim of an AML compliance program is to expose and correctly react to money laundering, terrorist financing and fraud-related risks. If your technology stack and internal processes are efficient and integrated, you dramatically improve your chances of identifying these risks without overburdening your compliance teams.
Our new guide, The Dawn of End-to-End AML Compliance, provides a game plan for combating financial crime and achieving AML compliance without sacrificing the user experience. You’ll also discover the key components of an end-to-end AML compliance solution and how to put your organization on the right path.