Risk Based Approach to KYC and AML Compliance

This article explains what is AML and KYC, what are the differences in AML and KYC and the best AML KYC certifications.

AML KYC certificate course in India

Regtech literally means Regulatory Technologies. It is a term coined to underline the importance of the technology in complying with various regulations. Regtech companies help the financial institutions and other intermediaries to solve the AML KYC compliance issues. But lets first understand what this AML KYC means ? How are they different. In this article, I am going to elaborate both these concepts.

KYC Procedures are designed to verify the identity of the customers.

However, these two terms are very common in finance that if you work in the finance industry or familiar with finance, you would say, why are we talking about this? Everybody knows about this.

What is AML KYC ?

But for many others, these are technical concepts. Now, let me define them.

  • AML, means Anti Money Laundering.
  • KYC, means Know Your Customer.

These are pretty simple full forms of the acronyms, but what does this mean?

Well, Anti Money Laundering (AML) is the set of rules and regulations to combat the peril of money laundering. Anti money laundering is the set of rules which help in prevent the proceeds of crime from entering the financial system.

Crime could mean proceeds of corruption, fraud, drug trafficking or tax evaded income. These illegal gains are required to be laundered so that they’re harder to track.

AML regulations want to stop criminals from transferring funds that are ill-gotten gains. AML is important for the development of nation as it results in increase in tax collections. That is probably the reason AML rules consider tax evasion as financial crime.

KYC is a different term. Well, Know Your Customer (KYC) process identifies an individual or a business before entering into a business relationship. Since the passing of the US Patriot Act, KYC processes are playing important role as they help to:

Changing Landscape of anti-money laundering

Banks want to know answers of some important questions by doing KYC.

  • Who is putting money into your bank account?
  • If it’s a company, who owns it ? Who’s behind it?
  • Where did the money come from?
  • Are you committing any financial crime in some ways?
  • Is this company being setup to avoid tax regulations or to avoid any laws or to commit some other kind of illegal activity?

So they want to know the customer to understand if they are not in some way indulging in illegal activities. Identity verification has become necessary in establishing business relationship. Financial institutions need some papers to complete this activity. They need your identification documents and proof of residence.

Identification documents are your e-KYC document such Aadhar or Social security number like PAN. However, the landscape of KYC has changed significantly. It is not as easy as its written over here. There are many more complexities involved in the AML. To understand these complexities, bank employees need training. One of the best training available on this subject is through CAME program.

There is a sea change in the focus of compliance activities. The traditional KYC approach is on the verge of end. Risk Based approach to money laundering is a new key to aml compliance. This creates another opportunity for the regtech companies to help the financial services firms.

Risk Based Approach and AML KYC Certification

This program is helpful for the AML professionals to understand the high risk associated with the customers. It describes and defines the PEP. Additionally, goes into details of risk associated with real estate and gems and jewelry sectors.

Ideally, to get into the Regtech space no formal education is required. It is the concept which identifies the pain points in the regulatory compliance. It help the banks, telecom and other closely regulated companies. Hence, it is necessary for the regtech companies to understand the changing dynamics in money laundering domain.

Know Your Customer or KYC has become history and now the Risk Based Approach to AML Compliance is the future.

Certified AML program on Risk Based approach is the core aspect of larger certification program called CAME.

Certification in Anti-Money Laundering is an endeavor to meet the growing demand of the skilled resources for the financial institutions. Over the years this certification has proved important in the professional development. It not only speaks about the regulations across the world but it elaborates the technology tools and solutions. This is one of the sought after certification program in the technology companies because of its swiftness in completion process.

They have created different e-learning modules around different complicated AML KYC concepts.

What do you learn in AML certification ?

Certified Anti Money Laundering Expert (CAME) is an international certification. Prevention of money laundering regulation is an important aspect of AML KYC certificate. CAME has however, added chapters on FATCA, FCPA, Dodd Frank in the same syllabus. Additionally, enhanced due diligence (edd) has become an inherent aspect of the program.

  • Money Laundering related case studies in addition to different Anti Money Laundering Concepts.
  • How Risk Based AML helps expanding business.
  • Understanding of Individual and institutional roles in Anti Money Laundering.
  • Identifying linkage between Financial Institutions and AML measures and their inseparability.
  • Be familiar with instruments that help focusing on the high-risk areas.
  • Understanding the easy modality and benefits of applying Customer Due Diligence (CDD) with the institutions.
  • Dealing with customers in relation to Anti Money Laundering Regime.
  • Understanding the matters of training to junior staffs to facing the customers.
  • Measures applicable to face problems regarding AML or Terrorist financing in the course of day to day business.
  • Recognize the matters and mechanisms of escalations.
  • Supervisory modality and measures to compliance.
  • Sanctions and their vicious impacts on individual, institution and the national for non-compliance.
  • Developing AML or CFT policies and procedures for the institution.
  • Values and benefits of AML or CFT measures.

Regtechtimes offers the Certified Anti Money Laundering Expert program for Regtech community. This partnership helps the audience of Regtechtimes to gain discounts of 20% on the registered prices (all costs included).