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Anti-Money Laundering (AML) and Know-Your-Customer (KYC) are common terms that many background screening companies are starting to talk about. AML/KYC compliance standards are often employed in the corporate and finance worlds and work to protect a business from doing business with sanctioned or convicted entities – and from the resultant criminal charges, regulatory fines, or reputational damage. All of the benefits of screening for these entities can also provide CRAs with an additional set of products to provide clients so that they have the most thorough information possible.
What is AML/KYC compliance?
AML represents regulatory requirements that require the financial services industry to screen and monitor its customers to help prevent Money Laundering, Fraud, and Terrorist Financing. For the most part, the industry is obligated to abide by laws, controls, and processes that must be implemented to achieve regulatory compliance. By contrast, KYC is a component of AML and refers specifically to how firms establish and verify their customers’ identities and monitor their financial behavior. Here’s why this is important and how you can protect your business and clients.
As the identity verification process continues to become more digitized, understanding the importance of updating your AML/KYC processes is vital to stay compliant. Previously used legacy solutions no longer meet today’s demands and do not provide the most accurate data that is important to reducing false positives and identifying bad actors. It’s becoming increasingly more difficult across industries to identify the individuals that are potential risks, and understanding the opportunities and benefits of upgrading your process is important to ensure your organization provides clients with high-quality data and stays competitive.
Vital4 has invested in AI, machine learning, and automation technologies which are one the most effective ways to bolster your screening services. Automation can improve your business’s operational efficiency as it severely cuts down on time spent sifting through data, reduces false positives, and allows you to increase capacity and take on more clients. Automation and curated data are key components to catching sophisticated criminals and having the freshest, most accurate data doesn’t only reduce false positives, it helps make sure that bad actors can’t slip through the cracks. The Crypto industry, in particular, is growing but presents numerous risks as people find ways to conceal their identities and make elusive financial moves. Luckily, AI can spot red flags that we as people may not be able to identify and is the best tool for tracking transactions around the clock.
Lastly, complying with regulatory requirements and understanding the liabilities is extremely important. As compliance protocols for different industries continue to be updated to reflect the digital age, understanding how AML/KYC affects clients and your business can no longer be an afterthought. Due diligence is an important aspect of the job as a screener, and providing clients with the most relevant and accurate information to minimize all risks should be a top priority.
To learn more about why AML/KYC is important to your background screening business, register for our upcoming webinar here!