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 Compliance Certification course in India

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

KYC Procedures are designed to verify customer identities.

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

Know Your Customer or KYC has become history and now the Risk Based Approach to AML Compliance is the future. Building the customer risk profile is now becoming essential for financial institutions.

What is AML KYC?

But for many others, these are technical concepts. Now, let’s look at AML KYC definition.

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

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

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

Proceeds of 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 crucial for the development of the nation as it results in an increase in tax collections. That is probably the reason AML Rules consider tax evasion as a financial crime.

KYC is a different term. Well, Know Your Customer (KYC) means the process to verify the identity of an individual or a business before entering into a business relationship. It’s a set of rules related to customer onboarding processes. Since the passing of the USA Patriot Act, KYC processes are playing a crucial role as they help to:

What is AML KYC compliance?

In simple words, KYC and AML compliance is a process of screening individuals or clients against a watchlist at a global level. It is conducted to prevent and combat money laundering and loss of the company’s financials and reputation. The AML KYC compliance is a compulsory process for financial institutions, such as banks, stock exchanges, real estate, gaming platforms, and many more.

Changing Landscape of anti-money laundering and KYC

Banks want to know answers to 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 set up 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 a 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 documents such as Aadhaar or Social security numbers like PAN. However, the landscape of KYC has changed significantly. It is certainly not as easy as it’s written over here. There are many more complexities involved in the AML. To understand these complexities, bank employees need training. Above all, one of the best training available on this subject is through the CAME program.

There is a sea change in the focus of compliance activities. The traditional KYC approach is on the verge of end. The risk-Based approach to anti-money laundering is a new key to AML compliance programs. So this creates another opportunity for the Regtech companies to help the financial services firms.

Risk-Based Approach, and AML KYC Certification

CAME is one of the global certifications. It goes into the details of the AML/KYC and Risk-Based AML Approach. Additionally, this program is helpful for AML professionals to understand the high risk associated with the customers. It describes and defines the Politically Exposed Persons (PEP). Also, there are practical examples of PEP Screening. Additionally, it goes into detail about the risk associated with the real estate and gems and jewelry sectors.

It is the concept that identifies the pain points in regulatory compliance. It helps the banks, telecom, and other closely regulated companies. Hence, it is necessary for the regtech companies to understand the changing dynamics in the money laundering domain.

Nevertheless, sessions on Risk Based approach are the core aspect of larger certification program called CAME.

Nevertheless, sessions on the Risk-Based approach are the core aspect of a larger certification program called CAME.

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

Likewise, 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 certification. 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. The certification covers in-depth aml kyc regulations and all required syllabus to make the individual industry-ready.

Students also learn the following aspects

  • Money Laundering related case studies in addition to different Anti Money Laundering Concepts.
  • How Risk management helps in combating money laundering.
  • Understanding of Individual and also institutional roles in Anti Money Laundering.
  • Identifying linkage between Financial Institutions and AML measures and their inseparability.
  • Be familiar with instruments that help to focus on the high-risk areas.
  • Understanding the easy modality and also benefits of applying Customer Due Diligence (CDD) with the institutions.
  • Dealing with customers in relation to Anti Money LaunderingRegime.
  • Understanding the matters of training junior staff in addition to facing the customers.
  • Measures are applicable to face problems regarding AML or Terrorist financing in the course of the day-to-day business.
  • Recognize the matters and mechanisms of escalations.
  • Supervisory modality and measures to compliance.
  • Sanctions and their vicious impacts on the 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 the Regtech community. It is one of the best and up-to-date kyc and aml courses and offers the most practical approach to AML KYC. This partnership helps the audience of Regtechtimes to gain discounts of 20% on the registered prices (all costs included).