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All You Need to Know About Anti-Money Laundering Platforms

28 September 2020, 10:09

Introduction

Rooting out financial misdemeanors and laundering operations is crucial for ensuring transparent and legitimate trading and exchange of assets.

For forex platforms, cryptocurrency exchanges, and other financial trading and collaboration services, setting up comprehensive security features and safeguards to prevent scams, fraud, and money laundering is critical.

There are many software solutions available across the market that utilize AI and machine learning backends paired with human intervention to filter, review, and classify transactions, in an effort to detect and discriminate malicious activities.

This article looks at the benefits of deploying AML software to your forex or crypto exchange platform and whether such software remains relevant and useful today.

We shall also discuss how you can find the best options available to deliver comprehensive security to your financial exchange website.

 

What is AML Software?

An AML software suite utilizes information from various sources and integrates human-based filtering to detect and report malicious financial activities. Such software can help detect fraudulent economic activities and deter individuals from conduction terror financing, money laundering, corruption, and other such illegal financial activities.

To qualify as an AML software, the program must utilize an AI backend that contrasts and compares information retrieved from public watch lists, databases of flagged users, international directories of known malicious individuals, and other such sources.

An AML also provides the managers to assign scores to potentially hazardous individuals, based on their credit history, compliance data, and disclosed information.

 

How Can an AML Software Benefit Financial Institutions?

An AML software suite can help financial institutions monitor, report, and flag suspicious activities and individuals and notify authorities. An AML also provides the ability to ensure compliance with government directives and documentation aimed at discouraging fraud, corruption, and other illegal financial activities.

Examples of such compliance directives include the Bank Secrecy Act (1970) in the U.S, the Money Laundering Regulations (2007) in the UK, and the  Anti-Money Laundering Directive (2017) in the EU, which are often complicated and restrictive.

Additionally, international governing organizations such as the FATF require specific institutions to comply with a set standard of compliance directed at discouraging and tracing terror financing, black market operations, and trade of illegal items and commodities.

 

Why is AML Software Necessary?

These regulations result in the creation of vast amounts of user data that can be used by the software to ease the manual work required for the detection of malicious financial activities.

The automated programming of the AML software can filter and sort through data to highlight such transactions and user activities that require more attention and simultaneously compare and reference this data with publicly accessible databases and directories of malicious individuals and watchlists.

The software suite can also help AML, and financial safety officers ensure compliance of international and regional rules and regulations pertaining to financial activities, helping their organization meet all requirements effectively.

 

AML Software for Crypto Platforms

With the rise in cryptocurrency and online modes of financial trading and transactions, the use of AML software has become even more critical and convenient.

As cryptocurrency enables individuals to enjoy a certain level of anonymity, it is harder to filter out malicious activities as names and personal information cannot be compared to public listings and directories.

In this case, modern AML software has been designed to analyze and detect the usage pattern of individuals to detect patterns that represent malicious and suspicious activities.

Using such modern AML software can benefit cryptocurrency exchange websites to ensure that their platform is not utilized for illegal activities while remaining compliant with international laws and regulations.

 

Deploying AML Software to Your Site

An AML software is usually provided by SAS companies and can be scaled to meet your organization’s requirements. The instance of the AML software deployed at your end represents a dashboard customized for your organization that provides access to the incredible resources on which the AML is deployed at the site of its parent company.

An AML software suite is usually available at regular subscriptions. It can cost anywhere between $10 to $1000 a week based on your organization’s size, the duration of the subscription period, and the number of searches or transaction information regularly processed by your institution.

 

Conclusion

Unless we reach a utopian state globally, there will always be individuals who partake in illegal activities and try to obtain money through illegal means. Although we can all play a part as a society to root out such evils, when undertaken on a larger scale, a more robust and comprehensive approach is required.

With Anti-Money Laundering Software, institutions and organizations that offer financial services can ensure that their operations remain safe from fraudulent, malicious, and suspicious activities.

Particularly in the case of online trading and exchange platforms, the deployment of AML software can help recognize and flag unusual patterns of behaviors and transactions to reduce the instances of corruption, fraud, and money laundering in the age of anonymity and cryptocurrency.