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The federal government requires credit unions, fintech companies, and banks to construct and follow an effective Anti-Money Laundering (AML) compliance programs. Successful implementation ensures that your organization’s technologies, policies, human resources, and procedures are protected from financial crime. 

Failure to follow these compliance programs may result in sanctions, heavy penalties, and criminal proceedings. A strong AML process, like KYC (Know Your Customer) compliance, will help you avoid these consequences. The KYC process involves:

1. Collecting customer data

2. Verifying each individual’s identity

3. Assessing the level of money laundering risk associated with a transaction

But how exactly can you construct a successful AML program? Awareness of both best practices and the common mistakes in AML compliance will benefit you greatly. 

1. Poor internal communication and lack of training

No matter how established your company is, an AML compliance program is bound to fail when there is a lack of internal communication. Leaders and departments should be open to communication to help foresee problems and promptly resolve small issues before they evolve. 

Employees such as senior management, audit staff, customer-facing staff, and operations/back-office staff should be aware of the internal and social consequences of non-compliance, money laundering techniques, and the steps to take when they spot suspicious behavior. You’re creating a strong compliance culture by providing practical tools and skills to carry out AML and KYC standards. 

When your organization has a sturdy internal communication system, everyone will be able to understand the value of AML compliance, further protecting the institution against money launderers. 

2. Failure to keep up with changing regulations and standards

It’s crucial for your institution to constantly monitor changes in national regulations and industry standards. Since money laundering techniques are continuously developing, AML compliance rules and regulations should also continue to strengthen. 

By being unaware of the updates and trends in the industry, you’ll lack accurate monitoring, open doors to non-compliance consequences such as hefty fines and penalties, and risk damaging your company’s reputation. By following the latest news and regulations related to AML compliance, you help your organization stay informed and protected against potential risks. 

3. Use of outdated technologies

Don’t skimp on outdated technologies and third-party services when building compliance. Assuming that your current tech is sufficient can be one of the biggest AML compliance mistakes. You may not have detected fraud and encountered data losses and breaches today, but you shouldn’t wait for scammers to bypass your outdated technology before deciding on an update. 

4. Relying on manual labor

Being dependent on the human touch when overwriting old documents or collecting data can leave your institution vulnerable to process errors. The use of human resources is inefficient. The cost, time, and focus required to execute, complicates the task even more. With automation, your company can prevent human error while also staying compliant with regulatory updates.

Improve Your AML Compliance Policy 

Despite the strict AML measures imposed by the federal government, many organizations are still fined and penalized for defiance. These are usually due to weak internal controls and compliance failures. 

Avoid non-compliance consequences by learning from other companies’ common mistakes and implementing reliable technologies like Q5id’s identity proofing, cloud-based authentication, and biometric verification. Read more about how our authentication solutions can transform your organization.

Contact us to learn more. 

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