The importance of AML for non-financial institutions


Anti-money laundering compliance is usually associated with financial institutions; however, Sentinels has revealed how and why non-financial institutions should also protect themselves.

According to Sentinals, it has never been easier for bad actors to carry out financial crimes, especially money laundering.

Quick, widespread access to a vast range of financial products, from neobanks to money transfer services, has made the prospect of financial crime a much more accessible, attractive, and prosperous endeavour.

As such, Sentinels advocates that all firms, even those not strictly operating in the finance space, need to take steps to ensure that all money that flows through their accounts is being tracked and checked for potential money laundering, terrorist financing, and against sanctions lists, among other things.

Designated non-financial businesses and professions (DNFBPs) can include casinos, real estate agents, dealers in precious metals, lawyers or notaries, and trust and company service providers.

The Financial Action Task Force (FATF) provides a list of DNFBPs and their corresponding customer due diligence and record-keeping requirements.

Sentinels said that DNFPBs are at risk because many criminals exploit the regulatory uncertainty and general lack of understanding of DNFBPs to commit financial crimes such as money laundering and terrorist financing. The specific AML challenges faced by DNFBPs often vary depending on the national regulatory environment and industry, however.

DNFBP AML compliance is a global regulatory challenge, Sentinels added, and deficiencies that exist within national and regional regulations provide criminals with the opportunity to carry out financial crimes. As such, governments and national authorities regularly take action to raise awareness of DNFBP money laundering because it relates to specific trends.

So, what can DNFBPs do to protect themselves?

Sentinels highlighted five key ways non-financial institutions can do more to protect their data and proprietary information and that of their clients.

First, DNFBPs should conduct robust and comprehensive client due diligence (CDD) and know your customer checks (KYC). They should also leverage existing support networks of AML authorities in mitigating clandestine behaviour, and maintain proper records and documents of transactions for at least six years.

DNFBPs should also make sure to submit suspicious transaction reports to AML authorities where appropriate, as well as minimize the use of cash transactions and replace them with state-of-the-art payment processing solutions.

One major tool that can help DNFBPs is the use of automation. Sentinels said that firms should use a robust automated transaction monitoring solution to reduce the time taken to remediate compliance issues efficiently and reduce the number of false positives that waste compliance officers’ time.

Read the full post here.

Recently, Sentinels expanded its leadership team with the appointment of Christian Roberts to the role of chief product officer.

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