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16 March 2022, 11:15


A risk analysis is an essential part of anti-money laundering. Find out more about the process and how software may assist you.

Financial crime and fraud cost the world an average total of $5.38 trillion per year. Every large corporation and wealthy individual now handles most or all their transactions online. This has exposed them to the threats of online money laundering.

The solution to this problem is anti money laundering (AML) software. Many corporations and wealthy individuals are using this advanced analytical software to help assess how much of a risk fraud and money laundering pose. This article will help you understand risk analysis, and why AML software can protect your company.

What is Risk Analysis

This isn’t the risk analysis you would use during financing activities or an investing decision. Money laundering risk assessment measures the probability of a company being involved in fraudulent activities. Risk analysis software identifies which parts of your company may be attractive for use in white-collar crime.

A business’s size, customer base, types of transactions, and geographical setting are all potential risks of exposure. Fraudsters and even terrorist groups may use a company to launder money. Multinational companies, trusts, and politically exposed persons (PEP) are at the most risk.

Who Are the FATF

The Financial Action Task Force exists to study global financial crime and make recommendations on how to fight it. These recommendations can be legal or regulatory proposals. They also keep a list of people who commit fraud and launder money.

They recommend that all businesses use Fintech (financial technology) to monitor potential threats. AML software (also known as RegTech) can help a company adhere to the regulations set by the FATF.

How AML Software Works

There are three different ways in which AML software assesses risks. Certain programs screen clients, some screen transactions, and others monitor transactions.

Client screening first verifies if a client’s identity is authentic. It then checks to see if that client is on fraud or terrorism watchlists during the initial stage of a transaction. The software will then flag fake identities and known criminals.

Transaction screening and transaction monitoring are two different approaches. Transaction screening software identifies the sender and receiver correspondence related to a transaction. It then checks if either person is on the international fraud and terrorism list.

Transaction monitoring analyses patterns in a person’s behaviour. The person’s record of transactions is run through a filter to see if it matches known suspicious patterns. If a person’s track record looks suspicious they will be flagged and investigated.

Why AML Software is Essential

Money laundering does not only affect a business’s performance. If your company is used to launder money, AML software may flag you, which will affect your company’s ability to trade. Having AML software will help you get ahead of crime and protect your customers.

Protect Your Company Today

Criminals can use almost any company to launder money. Financial crime can happen to anyone. It’s up to a business to protect themselves, and the best way to do that is with AML software.

RegTech provides great tools for risk analysis and compliance. If you want to learn more about AML compliance, read more on our blog page.

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