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Anti-Money laundering in wealth management: key questions answered
The fight against financial crime in wealth and asset management (WAM) is heating up. Regulatory bodies worldwide are demanding stricter Anti-Money Laundering (AML) measures, and for good reason. With complex financial products and a focus on privacy, the WAM sector is vulnerable to abuse.
Today we explore four key questions to help WAM firms navigate the evolving AML landscape.
What regulations are driving the change?
Regulatory bodies around the globe are tightening the grip on Wealth and Asset Management (WAM) firms in the fight against financial crime. The UK’s Financial Conduct Authority (FCA) is urging firms to leverage data-driven approaches to identify and prevent such activities. Similarly, the United States’ Financial Crimes Enforcement Network (FinCEN) is proposing stricter AML/CTF rules for investment advisors, including mandatory AML programs, suspicious activity reporting, and information sharing. Meanwhile, Australia’s AUSTRAC is placing emphasis on Enhanced Due Diligence (EDD) to ensure transparency around the source of funds. These measures highlight a global push for stricter AML compliance within the WAM sector.
Signs your AML system needs an upgrade
Financial institutions aiming to achieve effective AML compliance can be hampered by outdated systems. Several warning signs indicate this might be the case. These include sluggish onboarding processes with delayed KYC verification, which can be a sign of slow and inefficient systems hindering customer acquisition. Analysts overwhelmed by manual reviews and a flood of false positives suggest system inefficiencies, potentially due to a lack of automation and sophisticated risk scoring. Furthermore, regulatory penalties for non-compliance serve as a stark reminder that the current system might not be keeping pace with evolving AML regulations. Finally, expensive upgrades and integration difficulties point towards a legacy system nearing its end-of-life, highlighting the need for modernization to ensure effective AML compliance.
How can AI improve compliance
AI offers a powerful weapon in the fight against financial crime. Its ability to analyze vast datasets allows it to detect suspicious activity that might slip through traditional methods. Furthermore, AI automates many compliance tasks, freeing up analysts to dedicate their expertise to investigating the most high-risk cases. This combination of superior detection and streamlined processes translates to significant time and resource savings for financial institutions.
Balancing compliance with client experience
We understand that security is a top priority, and we take Know Your Customer (KYC) procedures very seriously. These procedures help ensure a safe and secure environment for everyone. During KYC, we build a comprehensive profile of our clients. This involves using sanctions lists, Politically Exposed Person (PEP) databases, and adverse media checks. This allows us to identify potential risks and prevent illegal activity. In addition, we leverage third-party data verification to streamline the process and minimize paperwork for you. This collaborative approach ensures a smooth onboarding experience while prioritizing security for all parties involved.
Effective AML compliance is no longer just a regulatory burden – it’s a strategic advantage. By embracing new technologies and regulations, WAM firms can create a safer financial system and gain a competitive edge.
International Fintech Business (IFB), can help you enter the fintech industry. We will help you register a company with a financial license in any jurisdiction or buy an already-made company. Our experts can help with any questions you may have. Contact us today!
