Sanctions and AML Insights

Stringent international steps against money laundering require organizations to take robust steps in detecting and reporting suspicious activities that may indicate that financial crimes are taking place through their business. Transaction monitoring refers to the process of observing customer transactions in real-time, or even retroactively, to spot red flags and identify risks in senders and beneficiaries. While this may seem straightforward, it requires screening large volumes of transactions against encoded rules and available sanctions lists. Most companies use software to ensure that they can thoroughly and accurately monitor customer transactions.

It may seem as though there is an ever-growing list of sanctions against Russia, Belarus and other territories. As a business, it’s challenging to stay on top of these sanctions, putting you in danger of non-compliance. All businesses in all sectors need to comply with sanctions, including charities and non-governmental entities. Fines are not only issued to those who are in violation of sanctions but for failing to implement adequate controls to prevent those violations.

Financial criminals generate profits from their acts and often disguise these proceeds through money laundering, enabling criminal parties to use their funds without jeopardizing their activities. According to the United Nations Office on Drugs and Crime, between EUR 715 billion and 1.87 trillion is laundered every year (2-5% of the global GDP). The changing global risk landscape, including the advent of innovative fintech start-ups, virtual payments and cryptocurrencies, requires a fresh approach and stricter controls than ever before.

In today’s complex regulatory environments, businesses have to be careful about who they have business dealings with. Enhanced Due Diligence is an advanced KYC due diligence process that provides additional risk investigation into high-risk customers or large transactions. Knowing your customers’ past and present business dealings and their links to high-risk countries or entities can significantly lower a business’ risk of regulatory fines and other penalties.

Anti-Money Laundering refers to the laws, regulations and procedures aimed at uncovering the efforts unscrupulous parties may make to disguise illicit funds as legitimate income. Here are just a few of the terms you should know when it comes to AML Compliance:

Name Matching is the "real hard nut to crack" in AML / Sanctions compliance. While Fuzzy Algorithms can help with some of the real world challenges like typos, incomplete strings etc. some issues like transliteration issues, nicknames, spelling differences can't be mitigated with any fuzzy algorithm. The results are either an overload of false positives or, even worse, false negatives. sanctions.io's new name matching technology solves these challenges by blending machine learning with a set of traditional name matching approaches. Learn more about different approaches and technologies for name matching problems in this article.

The Financial Action Task Force (FATF) was established in July 1989 to combat money laundering and terrorist financing. Today, more than 200 countries follow their recommendations and AML standards. As part of their mandate to curb financial crime, the FATF blacklists countries that have been identified as being inadequate in their counter-financing of terrorist regimes or anti-money-laundering practices. This list is sometimes called the FATF AML deficient list. Before countries are blacklisted, they are placed on a greylist to first address identified strategic shortcomings as well as the agreed time frames for remediation. This article will explore the differences between blacklists and greylists in greater detail, as well as how to remain compliant.

Cyber sanctions are a fairly new addition to the global regulatory environment, but they are increasingly important. These sanctions work in a similar fashion to traditional sanctions. They are designed to restrict transactions, trade and commercial connections with individuals and organizations that are suspected of carrying out cyber-enabled assaults.

Following the Russian invasion of Ukraine, Economic Sanctions have been in the spotlight for the last couple of weeks. In this article we discuss what Economic Sanctions are and how they exactly work.