Blog: 5 ways digitization facilitates prevention of money laundering

In the last couple of years, banks (and organizations in other industries) have received fines or settled charges for record-breaking amounts for insufficient Anti Money Laundering (AML) practices. Scrutiny by regulators has shaken the status quo: basically all banks have indicated that improving Know Your Customer (KYC) and AML practices will have priority the coming years. We've listed five areas of use where digital solutions can be leveraged to ensure a more compliant and secure KYC and AML process.


1. Documents & Signing

To increase the completeness of the digital pool of data, paper documents should be digitized, making filing, historic data and general compliance quicker and more accessible. Digitized documents also enables e-signing which is a great way of creating a faster and smoother deal process and/or customer onboarding, as well as ensuring your counterpart in fact has signatory rights for his/her company.

AML and KYC in short

A KYC (know your customer) process is in place to verify the identity financial status of potential customers with the purpose of preventing crime (e.g. money laundering or terrorist financing). It could include checking personal details and relations, financial information, company history and engagements and conducting credit checks, among other things.

AML (anti-money laundering) contains procedures and best practices to prevent and stop the gain of money through criminal activities. This can include a KYC process, routines, risk classifications and assessments among other things.

2. Data Collection & Verification

Asking a representative of a company important KYC or AML questions is unfortunately highly unreliable. Therefor data needs to be collected and verified from more reliable sources, such as government agencies or other data providers. Today there are digital tools in place to help you collect and verify basic company information, company representatives (their relations and other engagements), ownership structure and much more from reliable sources. If you want to go all in you can automate this process as well, making it smooth and cost-efficient.


3. Monitoring

Are you doing your AML or KYC controls regularly enough? What if you could do it once, and then receive updates when something you looked at changes? Well, you can! Digital solutions today provide this opportunity, making a big part of compliance-related work automated. Changes in company ownership structure or board members, a representative ending up on a sanctions list or being considered politically exposed, or actions of a representatives relations are just a few examples of what you can monitor today.

4. Risk & Fraud Detection

AI, automation, pattern recognition and risk classification are all parts of a very exciting future, when it comes to AML and KYC practices. New services are emerging where advanced patterns are able to be recognized in companies, and flag or warn of potential risks of money laundering and/or fraud. These solutions could identify and classify risks by using tons of data and sophisticated algorithms.


5. Customer Onboarding

An important part of the AML process is carefully choosing your partnerships and customers. Based on your own risk calculations, classifications and standards, you should discard all those who pose a significant risk to your business. Therefor your customer onboarding should be as digital and automated as possible, especially when it comes to compliance aspects. This will not only reduce risk and manual labour, but also improve customer experience.






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