Regulators are passing stricter policies, as well as cracking down on anti-money laundering (AML), Know Your Customer (KYC) and sanctions noncompliance. Fines related to noncompliance increased 160 percent between September 2018 and December 2019, in fact.
This year also kicked off the implementation of the Fifth Anti-Money Laundering Directive (5AMLD), which included among its provisions requirements that cryptocurrency companies be more vigilant in preventing financial crimes from being committed over their platforms. Companies are already anticipating the sixth edition of that regulation, which will go into effect in 2021 when it is expected to increase the severity of money laundering penalties as well as better ensure that individual perpetrators do not evade personal responsibility for their crimes.
The March AML/KYC Tracker® explores the changing regulatory environment and new initiatives for improving customer identity verification and authentication.
Around The AML/KYC World
Conducting in-person KYC checks can be an expensive endeavor, and digital customer verification methods make it more cost-effective for financial service companies to onboard customers in remote locations. The Reserve Bank of India recently released guidelines outlining an approved method that private companies could use for conducting KYC checks online by using videos.
Six Thai banks are also exploring whether biometric-based authentication measures can be used well as part of digital KYC processes. The Bank of Thailand has permitted the six banks to use this KYC method to verify customers during onboarding and will consider permitting more banks to use the method if these financial institutions (FIs) report positive results.
FIs in the United Arab Emirates are also looking to get ahead of fraud with improved digital KYC practices. A consortium of UAE banks is developing a blockchain-based platform over which they could share information about authenticated customers. This is intended to accelerate banks’ KYC processes and improve AML efforts.
Taking A Local Approach To Fighting Money Laundering, Fraud Worldwide
Payment processing providers need to ensure they do not accidentally onboard malicious merchants that would abuse their services for laundering money. They also must keep their honest merchant customers protected from fraud. Keeping everything safe when operating globally is challenging because there’s no one-size-fits-all profile for a risky transaction or suspicious company, however. Payment providers need to develop deep understandings of what transaction norms look like in each market and merchant sector before they can accurately flag high-risk interactions, explains Dan Sketcher, head of product for payment processor Global Payments’ AU/NZ brands eWAY and Ezidebit. In this month’s Feature Story, Sketcher explains strategies for a better understanding of transaction risks and thwarting fraud in different sectors and regions.
Deep Dive: Identifying ID-Free Individuals With Mobile Data,
Consumers who are escaping a disaster are likely not to have the time or presence of mind to collect their ID documents before fleeing, while citizens in some countries are never provided with formal identification in the first place. This can present a challenge when these individuals try to pass the KYC checks that banks and humanitarian services may need to conduct. Aid organizations and their partners are working to find ways to reliably establish identities for those without standard IDs so that the organizations and financial services companies can better provide aid and support to help the individuals get back on their feet. This month’s Deep Dive examines efforts to leverage biometric details and mobile network operator data to verify these hard-to-identify individuals.