In a rapidly evolving financial landscape, combating money laundering (AML) and ensuring compliance has become highly essential for money service businesses (MSBs). Two weeks ago, we hosted our second Innovation in Payments and Remittances (IPR)  training session, focusing on AML and compliance strategies tailored to the unique needs of MSBs. 

In this article, we’ll delve deeper into the key highlights discussed during the session for you to gain key insights from.

If you couldn’t attend the live sessions, don’t worry as you can still sign up at a reduced rate and access them on-demand.

It’s a great opportunity to enhance your expertise, earn CPD points, and secure a certification. You can register online here: https://payments2023.ipr-events.com/register

Now let’s dive right in and explore some of the key takeaways from the 2-day sessions.

1. Differentiating Terrorist Financing and Money Laundering: Recognising Patterns

Distinguishing between Terrorist Financing and Money laundering is vital in developing targeted prevention strategies. The training session highlighted that while both activities involve illicit financial transactions, they often exhibit different characteristics. Terrorist financing can be sourced through legitimate funding, unlike money laundering where its origin is from criminal activities and financial crime. 

Money laundering frequently involves larger amounts aimed at concealing the illegal origins of funds whilst Terrorist financing comprises of small, discrete transactions intended to avoid suspicion.

Noticing these unusual large or small transactions can be a key indicator of potential terrorist financing, allowing businesses to act quickly and prevent the flow of funds to harmful causes.

Furthermore, MSBs should set up appropriate monitoring mechanisms and transaction thresholds to better identify and report suspicious activities that align with the specific patterns of these crimes. This way MSBs can reduce the likelihood of criminal activity being carried out through their business.

2. Structured KYC Procedures: Gateway to prevent Money Laundering risks

As the starting point for any business relationship, a structured and rigorous KYC process enables MSBs to verify the identity of their customers, assess the legitimacy of their transactions, and detect potential red flags. By obtaining and verifying relevant information such as customer identification, source of funds, and purpose of transactions, MSBs can create a comprehensive customer profile that aids in identifying suspicious activities. Effective KYC practices also enable MSBs to establish a strong foundation for ongoing due diligence and monitoring.

Recognising that every MSB operates within a distinct operational context, it’s crucial to design risk assessments that address the specific needs and characteristics of each business. This approach ensures that potential vulnerabilities are identified and addressed effectively. By analysing factors such as transaction volume, customer profiles, geographic scope, and business relationships, MSBs can develop risk assessment frameworks that accurately reflect their exposure to money laundering and other financial crimes.  

RemitONE’s Compliance Manager™ (COM) features a set of compliance features to ensure enhanced detection of fraudulent money. Some of the features include:

• Linked Transaction Detection: will detect multiple transactions sent by the same remitter to different beneficiaries or multiple remitters to the same beneficiary. This will help you notice any suspicious activity you need to alert authorities of immediately.

• NameMatch™: Eliminating the need for manual cross-referencing against international sanction lists, our technology streamlines the process, ensuring greater efficiency. The system cross-checks against multiple sanction lists and accommodates the addition of custom lists. Moreover, seamless integration with external Compliance List Services, such as Reuters’ WorldCheck, Experian, and GBG, widens the spectrum of available lists, encompassing PEP lists as well.

• Dynamic risk scoring: Conduct personalised risk assessments utilising assigned scores ranging from 0 to 100 for Remitters and Beneficiaries. This score continually adjusts in response to a range of variables, encompassing factors like source country, nationality, individual versus corporate affiliations, and name screening outcomes.

If you’re interested to integrate COM™ into your system contact us at sales@remitone.com.

3. A Compliance Officer/MLRO is crucial

Delving deeper, Ibrahim emphasised the fundamental role of a Compliance Officer or Money Laundering Reporting Officer (MLRO) in combatting money laundering. There are four essential components he advised to keep in mind when selecting the right candidate:

1. Qualifications: The compliance officer must possess a strong foundation, supported by relevant qualifications and certifications. Their background should reflect a deep understanding of AML practices to effectively help them navigate the complexities of compliance. They should have a minimum of one year of practical experience in the field and hold credentials related to AML/compliance, endorsed by international standard organisations.

2. Championing Independence: Independence is key as the compliance officer controls AML policies, risk assessment, internal controls, and training. Furthermore, their decision-making process should remain uninfluenced by other team members, as external interference can cloud their perspective and make them compromise compliance.

3. Dedication Demanded: the compliance officer should be a dedicated, full-time member of the team to ensure a high level of monitoring. While certain operational aspects can be outsourced, the oversight and management of these functions, particularly in jurisdictions like the UK, remain firmly the responsibility of the compliance officer.

Sign up for IPR Training Sessions – Offering CPD Points and Certification

We have more exciting upcoming events you can sign up for. Discover the full schedule of events and reserve your spot now at: https://www.ipr-events.com/.  

Remember, tickets are limited and allocated on a first-come, first-served basis. To ensure your participation please secure your seats early. 

Don’t miss out on these exclusive opportunities to expand your knowledge, connect with industry experts, and stay at the forefront of cutting-edge developments. 

We look forward to seeing you in our IPR training sessions!