With many financial transactions taking place online, money laundering has become the latest threat on the internet for scams. As a result, people are still not very comfortable with online transactions as they fear that they might end up losing a lot of money.
As technology brings new problems, software developers bring in new solutions to fix those problems. For example, even as money laundering threatens, developers have developed anti-money laundering software that helps prevent online theft and money laundering.
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Functioning of Anti-money Laundering Software
Anti-money laundering software works by filtering data and classifying it based on the level of suspicion. It’s then checked for any abnormal activities. For example, any sudden rise in the funds in an account or withdrawals involving huge sums can be considered abnormal activities. Even multiple transactions for small amounts at regular intervals in a brief period fall in this category.
The practice of depositing small amounts at regular intervals is called ‘structuring,’ which will be flagged by the software. The software also flags blacklisted names and any transactions from a country antagonistic to the nation. Once the data is mined and the suspected transactions are flagged, a report is generated by the anti-money laundering software.
Based on the report, the flagged transactions are investigated using human intervention. If the flagged transaction can be readily explained, the flag will be dismissed manually.
Types of AML Compliance Software
On the global front, the regulators of the financial sectors follow the recommendations given by the Financial Action Task Force to combat money laundering. The transactions that are tagged must be reported to the government agency.
Organizations can attain AML compliance with the help of AML software. The compliance software has three phases:
- Client Screening
- Transaction Screening and
- Transaction monitoring
Client Screening Software
The AML software verifies the new clients’ identities at the onboarding stage. Then, it checks the watchlists and other sanction lists to see if the client is on the list. The software will then evaluate the degree to which your business is susceptible to financial crime at the onboarding stage. As a result, proving cutting-edge anti-money laundering software can save your business time and money.
Anti-money laundering software is helpful at any stage of the client’s life cycle, such as new accounts or an existing client. With the right AML solution in place, you can have the assurance that your business is meeting its compliance obligations.
Transaction Screening Software
The software incorporates and clarifies multiple data points for each client’s transaction messages. For example, it includes the sender’s and receiver’s identities and verifies if the client is on the sanctions lists.
Transaction Monitoring Software
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The transactional behavior is analyzed to check if it fits any criminal profiles. Also, it searches for abnormal transactions that need to be investigated.
Anti-Money Laundering Software Summary
The world has become a global, digital village with every activity and transaction being carried out online. Unfortunately, it’s increased the crime rate on the net.
New software has been developed to prevent crime to counteract money laundering scams.