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What is AML Compliance and why it is important ?

The European market is governed by various regulations to which companies in certain industries must comply. Growing numbers of fraud transactions have turned Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) into major stakes for the protection of financial institutions. AML compliance play an essential role to prevent disciplinary, financial and criminal sanctions.

In this context, European directives were put in place to monitor financial activities. The 5th anti-money laundering directive took effect in January 2020. It provides a series of measures aimed at fighting financial crime more effectively and ensuring greater transparency of financial transactions. Organisations involved in AML compliance must increase their vigilance, through a thorough KYC (Know Your Customer) process. The KYC process consists in verifying the identity of your customers : most often, when they register remotely.

Which industries are subject to AML Compliance ?

Financial institutions such as banks, insurance companies, online credit services or online gaming companies, which issue credit or allow their customers to open bank accounts, are required to exercise due diligence.

It is therefore the responsibility of these financial institutions to check the identity of their customers, via KYC processes, to ensure that they are not involved in suspicious transactions. For example, they must check where large sums of money come from, monitor suspicious activities and report large transactions. This ensures that clients are not involved in money laundering transactions.

In recent years, many other players, such as real estate, sale and leasing of vehicles or retail sales, have also been subject to specific AML compliance regulations. As criminals’ techniques are becoming more and more sophisticated in money transfers, and terrorist actions are multiplying, they are now considered to present money laundering risks. Even some charities or non-profit organisations are subject to investigation because they can be used to carry out money laundering with the help of dishonest employees or through weak controls.

 

 

industries affected by AML compliance

What are the AML requirements ?

The Fifth AML Directive is a series of amendments to the structure of the Fourth Directive.

Initially targeted at money laundering, it gradually includes tax fraud and terrorist financing. The Fifth Directive involves a modification of Know Your Customer (KYC) due diligence by country. For example, it simplifies the procedures for verifying the identity of the customer when starting a remote onboarding.

Since 2014, this identification is governed by the eIDAS regulation, which introduces 3 levels for an electronic identity provider: simple, substantial or advanced. The 5th AML Directive allows electronic identity providers such as ARIADNEXT to become intermediaries between customers and their financial institutions. As of now, since the substantial level of digital identity is not yet fully democratised, other complementary measures are in place. Remote identity verification tools meet most of the new requirements in Europe.

The adoption of these new identification tools, brings great benefits to businesses, providing them access to millions of potential new customers in a much easier, more regulated, simpler, immediate and automated manner.

AML requirements

How does IDCheck.io help you comply with AML ?

Until now, anyone who wanted to open a bank account or an electronic wallet remotely had to provide various documents to prove their identity. From now on, in order to comply with the KYC process recommended by the AML directive, this person will have to enroll himself following a specific and complete process to secure his transactions. During a bank account creation or a loan application, the customer will be able to register himself following a fast, reliable and automatic process thanks to our IDCheck.io solutions. 

First step: the user captures his identity document using a web or mobile device. Then, the document data is automatically extracted and analyzed, delivering an instant verdict. Finally, to take identity verification one step further, we offer an enhanced identity verification service based on facial recognition or liveness detection. The identity of the document owner is verified remotely, thus guaranteeing that the document owner is who he claims to be. 

Our IDCheck.io automated identity verification solutions help users through the remote identification process and ensure regulatory compliance.

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