How AML Software Solution can Prevent Income via Illegal Activities?

Anti-money laundering (AML) includes a set of procedures, regulations, or laws designed for preventing generation of income through illegal actions. An anti-money laundering software helps banks, financial institutions, and other enterprises in monitoring suspicious transaction, and analysing customer data. The operation of an AML software solution takes place in various categories including compliance software, currency transaction report, and customer identity management. Providing real time alerts and tools, anti-money laundering helps in maximising operational effectiveness and security by reporting suspicious actions. In addition, AML offers a completely integrated data model, data normalisation, and data warehouse covering every aspect of account and trading activity for enterprises.

Installing AML Software Solution made Compulsory by Governments for Avoiding Illegal Financial Activities

By identifying growth opportunities, an AML software solution offers enterprises, having a foothold of the market, in propelling their operations. Next generation technologies addressing fraud management & AML across the enterprise, regulatory enforcement actions, and convergence of increased regulations are some factors driving the growth of the global anti-money laundering (AML) software solution market, according to a report by Future Market Insights (FMI). FMI’s report states that the global anti-money laundering (AML) software solution market is expected to witness a steady growth in the near future.

It has become essential for financial enterprises to invest in AML technology and understand importance of compliance for reducing risk factors associated with business operations. Governments are making it compulsory for enterprises in installing AML software solutions in order to avoid illegal financing activities. In contrast, complexity of data interpretation, problems related to data security, and high cost of implementation are some factors expected to restrain the market growth in the upcoming years.

New AML Rules in the U.S. and the U.K. to Prioritise Risks of Money Laundering

Regulatory bodies of the U.S. are paying closer attention to AML efforts. This has resulted into more investigations and examinations for those companies who do not have a comprehensive anti-money laundering compliance program installed. Financial services industries have fallen under the most scrutinised regulations. An example of this scenario is new AML rules imposed by Financial Crimes Enforcement Network of the Treasury Department, placing new stringent obligations on banks for identifying and verifying beneficial owners.

Owing to regulatory pressures, several banks have been pulled into this orbit by FIFA corruption scandal, giving a strong message about importance of the enhanced due diligence process. For first time over ten years, financial institutions in the United States- and also in the United Kingdom- have much-needed insight on the country’s intentions of prioritising money laundering & terrorist financing risks, to enable compliance officers in financial services industry for better allocating their limited resources.

Significance of Financial Action Task Force

The AML rules & regulations were recognised globally post the formation of Financial Action Task Force (FATF) in 1989, headquartered in Paris, with a framework for tackling money laundering on international standards. FATF is an intergovernmental organisation designing and promoting policies & standards for combating money laundering. The FATF has created recommendations which target terrorist financing, money laundering, and other threats to global financial system. Rising international trade and global economy has propelled both, wealth acquired by common citizen through commerce, and pressures faced by countries in tackling money laundering & other financial crimes.

Universally applicable recommendations are created by the FATF, designed to ensure equal treatment of all the participating countries. The organisation monitors the way its members implement guidelines based on each recommendation, reviews policies and procedures of each member to combat financial crime & money laundering, and seeks global acceptance of AML regulations. As techniques of a money launderer change over time, the Financial Action Task Force updates its recommendations in every few years.

The information presented here is sourced from Future Market Insights latest report. A sample of this report is available upon request.

Author: Abhishek Budholiya is a tech blogger, digital marketing pro, and has contributed to numerous tech magazines. Currently, as a technology and digital branding consultant, he offers his analysis on the tech market research landscape. His forte is analysing the commercial viability of a new breakthrough, a trait you can see in his writing. When he is not ruminating about the tech world, he can be found playing table tennis or hanging out with his friends.