Anti-Money Laundering – Minimising risks with electronic identification
Posted on the 28th April 2016 by Alex Garbutt in SME blog
Money laundering is a significant threat to the global economy
Due to the very nature of money laundering it is hard to quantify the amount of money that is laundered globally. However studies into the topic have suggested that the figure could be as large as $1.6tn each year, which equates to around 2.7% of global GBP.1
As a money transfer company we have to be able to identify and understand the risks of money laundering, terrorist financing and other fraudulent activities and apply the relevant preventative measures.
How does it work?
Money launderers may use money transfer companies to distance funds from their source. By converting into different currencies and investing into various financial instruments, the launderer layers multiple transactions. In some cases even disguising transfers as payments for goods and services, thus giving them a legitimate appearance. This makes it difficult for authorities to prove that money was gained through illicit activities.
Prevention
Understanding the risks alone, however, does not suffice. We take preventative measures to minimise the risk of illicitly gained funds being transferred through our platform. We have implemented various measures to adhere to anti-money laundering (AML), counter terrorist financing (CTF) and know your customer (KYC) compliance laws. These involve screening all our clients both pre-trade and on an ongoing basis, and implementing robust systems to identify and alert us to any suspicious activity.
The first, and most thorough initial step we take is to carry out in-depth KYC procedures. By verifying the identity of our clients we can determine and manage the risk and propensity to commit money laundering, terrorist financing or identity theft.
New technology
In the on-going fight against money laundering and fraudulent activity, technological advancements are helping to minimise risks and improve identity verification. We have recently integrated electronic identification (e-ID) within our registration process, which is a new way of screening UK residents rather than relying on the submission of paper documents.
Prospective users provide us with basic information such as their names, dates of birth and addresses, which we cross-reference against hundreds of databases. Not only does electronically verifying identity in this way reduce friction by creating a straight-through registration process, but it also acts as a more stringent verification process, screening and cross-referencing against significantly more independent databases than would be possible in a manual process.
Money Mover is committed to continuously updating our regulatory framework and procedures in order to ensure we are fully equipped to combat money laundering and other financial crimes.
1 http://www.fatf-gafi.org/faq/moneylaundering/
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