What are the KYC and AML Checks?

Blog / What are the KYC and AML Checks?

Anti-money laundering (AML) rules are imposed by both national and international agencies worldwide, and financial institutions are subject to a wide range of screening and monitoring duties.

What exactly are AML and KYC?

The collective AML framework is intended to combat money laundering, terrorist funding, and risks to the financial system's integrity. Anyone working in the following industries is required by law to assess the risks of money laundering and terrorist financing by conducting AML checks: credit institutions, financial institutions, auditors, insolvency practitioners, external accountants, and tax advisers, independent legal professionals, trust or company service providers, estate agents, high-value dealers, casinos, businesses carrying out crypto asset activities. If you fall into one of these regulated groups, you should comply with the AML regulations.

Whereas AML checks guarantee that no funds you receive are the result of illegal or terrorist activity, KYC checks precisely verify the identities of your clients and investors' identities, their financial activities, and any dangers they may represent.

What Is the Distinction Between AML and KYC?

The distinction between AML and KYC is that AML (anti-money laundering) is an umbrella phrase for the spectrum of regulatory processes enterprises must use, whereas KYC (Know Your Customer) is a component portion of AML that involves organizations validating the identities of their customers.

KYC in an Anti-Money Laundering (AML) Solution

AML legislation in most countries requires enterprises to establish and run an AML software that is customized to their particular business needs and capable of addressing the specific threats that their customers or enterprises pose. The AML program of an enterprise should make it easier to carry out the functional screening and monitoring activities required by the AML legislation under which it works. The legal criteria and screening methods related to AML may alter based on current trends in financial crime and financial authorities' legislative demands.

The KYC process should occur during the onboarding process to guarantee that clients are telling the truth about who they are and the business they are participating in. Verifying a customer's identification entails examining the customer's personal information, the nature of the customer's business, and determining beneficial ownership.

KYC should also occur throughout the commercial relationship to ensure that a customer's risk profile remains consistent with the firm's information about them. The relations between AML programs and the KYC process should be one of continuous feedback. As a subset of AML, KYC may be used to customize an AML program to the precise needs of a firm, refining client risk profiles and improving compliance performance. Firms may use specialized KYC software to handle the identity verification process, allowing them to automatically prioritize high-risk customers while eliminating human error and false positives.

What Features Does Sanction Scanner Provide?

The AML software from Sanction Scanner is a complete AML compliance solution that provides client due diligence, PEP, sanctions screening, transaction monitoring, adverse media checks, and ongoing monitoring. The following are some of the distinctive features of Sanction Scanner's AML solution that help financial institutions fight financial crime.

  • Sanctions Screening: Businesses may make the control process more efficient and safe by utilizing our Sanction & PEP Screening service. With worldwide and real-time data, you can strengthen your company's AML compliance and spot dangers that might affect its image.
  • Transaction Monitoring: Sanction Scanner analyzes client transactions in real-time to discover high-risk and questionable transactions. If it identifies a dubious transaction, it can halt it and allow instances to be documented for further investigation. Thanks to its robust API interface, you can quickly implement Sanction Scanner into your business and keep track of the threats.
  • Politically Exposed Persons (PEPs): Due to their potential for bribery and corruption, financial institutions must see PEPs as high risk. Although financial institutions are not prohibited from opening accounts for PEPs, AML regulations require financial institutions to discover PEPs owing to the significant risks. PEPs may be easily detected with Sanction Scanner solutions.
  • Adverse Media Screening and Monitoring: You may use Adverse Media Screening and Monitoring to identify and defend yourself against crimes such as money laundering, terrorist funding, corruption, bribery, fraud, human trafficking, arms smuggling, or tax evasion.
  • Ongoing Monitoring: With Automated Daily Ongoing Monitoring, you may design the control period based on their customers' risk profiles; then, Sanction Scanner automatically performs all client monitoring checks. Consequently, Automated Daily Ongoing Monitoring safeguards your company against dangers such as noncompliance and reputational harm.

Please contact us and request a demo if you wish to see how Sanction Scanner's AI-powered AML compliance can help you fight financial crime and comply with local and worldwide rules.

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