Money laundering is a financial crime that can affect the economic condition of one country. Anti-money laundering compliance is an effective solution to this problem. It requires financial Insitutions to conduct research on customers profiles during their onboarding. One can use adverse media and social media to ensure their customers do not relate to illegal practices. Read on to learn more about this process.
Money laundering is creating a nuisance for financial institutions. It can have adverse effects on the economy as a whole. This leads the government to take steps that can curb its happening all around the financial sector.
That is where anti-money laundering compliance comes into the picture. This security system is a formation of policies, laws, and regulations that helps prevent, detect, and report potential risks.
AML compliance requires the financial institution to know its customers well and check their backgrounds while onboarding. Given this, firms need to take a deep insight into their customers through all the essential data available.
They can take the help of adverse media and social media. This is one of the popular investigation methods that one can use to avoid risk.
Keep reading to learn the importance of adverse media and social media screening for AML compliance.
The AML compliance system constitutes various measures to combat the possibility of financial theft. One such measure is Customer Due Diligence (CDD). It is helpful in the verification of identities and legitimacy of customers through the sourced data.
This can include thorough research through adverse media and social media. By that, it means navigating negative news or information about customers in the sources available on public media platforms.
This includes TV, newspapers, radio, magazines, web articles, blogs, etc. On finding any negative trait of the customer in the mentioned sources, it is termed as adverse media or negative media.
When it comes to social media, it can count on LinkedIn, Facebook, Twitter, etc., which often reveal the customers profile. Also, there is a high possibility of discovering negative pieces about the customer on such platforms, if any.
According to the Financial Action Task Force (FATF), Financial institutions should implement adverse media checks in their AML customer suit.
It says that the entities must take the help of reliable and independent sources to verify the accuracy of received data from their customers.
An effective adverse media screening covers the following aspects of high-risk customers.
Asides from this, this screening process should be done in such a way that the informed profile may match the investigated profile. This can include the name of the person, location, contact details, etc.
There are many official and unofficial data sources from which companies can conduct research about their clients. Here is a list of potential data sources that one can opt for anti-money laundering compliance.
Apart from the collection of data, it is important to ensure that it gives true knowledge about customers.
If done properly, adverse media screening can reveal all sorts of red flags like criminal records and historical sanctions. Some of the key features that are usually discovered while the screening process are:-
Asides from this, your screening medium can also highlight red flags like reputational damage or industry rumours. These may be unveiled from sources like blogs.
Using a medium for the screening process is as important as having a medium. It means collection and checking of the social profile of customers should be done in ways like:-
Make sure the basic demographic information about your customers is completed while maintaining its accuracy. Half knowledge is worse than ignorance -Thomas B Macaulay. So, it is important to make your research updated with accuracy. Also, if the companies ensure that the basic information is true, it can serve as the basis for further findings.
It is just not important to collect information and conduct adverse media checks; you need to establish a sound policy for the same. AML TRACE can help your research have effectiveness and quality. Logs of all findings are well maintained in AML TRACE with details:-
As per the AML regulatory requirements, companies keep the monitoring process on throughout their association with the customers.
Given this, you need to keep your eyes on customers social profiles and negative mentions on public sources. As your customer may sound fair while onboarding, but they may engage in crimes later.
Since it is important to maintain timeliness and accuracy with adverse media screening, it may sound time-consuming with the manual process. Also, it may lack the assurance that the results achieved are error-free or complete.
That's why companies have started looking for tech solutions and software to generate accurate results. These tools are able to fetch the negative news while covering every category of financial crimes.
Since anti-money laundering compliance is not an easy task, it requires much maintenance and assurance. Thus, the need to use the tech solutions like AML TRACE arises for maintaining verifiable information while boosting the screening process.
Compliance with AML UAE is a strategic process that requires regular monitoring of transactions. In fact, conducting adverse media checks before onboarding new customers is as essential as after tying a relationship with them. It helps maintain the efficiency and effectiveness of customer due diligence.
But sometimes, you may find it difficult to conduct these processes manually.
Thus, connecting with AML service providers like Smart Infotech can be helpful. All these services may not only provide safety against financial crimes but also avoid AML penalties and fines.