With financial crime more prevalent than ever, it is important that both companies and governments develop tactics to curb it. Probably the most common way of doing so is to implement anti-money laundering policies that prevent the smuggling of illegally-obtained funds. Most countries now have their own anti-money laundering policies, and many require that all financial institutions strictly abide by these policies in order to support efforts against financial crime.
Anti-money laundering policies typically require most entities that complete financial transactions to keep thorough records of their clients’ accounts and activities. If they come across any information that appears to be suspicious, they are required to report it to the government for further investigation. Financial institutions are crucial for the collection of financial intelligence, and the public sector greatly depends on them in order to compile data.
Additionally, anti-money laundering policies require financial institutions to periodically file reports regarding their clients and completed transactions. These reports vary by country, but many of them are quite similar. For instance, in the United States, certain paperwork must be completed for transactions that involve over $10,000. Similarly, if a transaction appears to be otherwise suspicious—even if it is not over $10,000—a bank employee must file a suspicious activity report (SAR).
Almost all countries with anti-money laundering policies have suspicious activity reports, and many of them also have certain pieces of legislation that protect banks as well.
Previously, banks had been wary about providing the government with clients’ personal information as they feared potential liability for doing so. Now, however, a majority of states have passed laws that allow banks to forward on client information without facing any backlash or legal repercussions. This has greatly simplified governments’ efforts to implement effective anti-money laundering policies and acquire financial intelligence.
It is important to note that banks are not the only financial institutions required to follow anti-money laundering policies and fill out SARs. Other institutions such as currency exchange firms, casinos, insurance agencies, and accountants must also follow certain anti-money laundering regulations. This is because they often complete large transactions and are likely to have direct contact with the individuals or companies that are responsible for financial crime. By gathering financial intelligence from these entities as well, the public sector is able to track down criminals more efficiently and, ideally, uncover legal violations before they reach a large scale.
Technology has become a critical part of anti-money laundering policies, because it has made it much easier for institutions to comply with regulations. By using special compliance platforms, such as ComplyAdvantage, companies are now able to easily research their clients and ensure that they are not doing business with criminals. This major advancement is becoming an essential tool for fighting financial crime.