A pivotal issue for regulators is money laundering. Money launderers are acquiring sophisticated ways to move illegal money as they are exposed to new technologies and regulators are imposing regulations to obligated entities. Anti-money laundering laws are stringent and united states is cracking the whip financial institutions (FIs) must not only verify the identity of a customer but they are required to identify beneficial owners. Governments are still not doing enough to combat money laundering and terrorist financing even many governments are found involved in money laundering. So changing in the regulations of Anti-Money Laundering (AML) is required. Regulations in many countries are sufficiently stringent for Anti Money Laundering but AML measures have much space for improvement. Due to compliance-related lapses, financial institutions suffered hefty fines. The United States government is helping financial institutions to deter fraud and preventing bad actors from exploiting their services by announcing new measures and blocking the funds of individual illegal activities. Corporate monitors should be selected ethically instead of political favours. Due to lack of expertise in compliance smaller community banks are unable to keep up with changing regulations. On certain anti-money laundering resources, Treasury’s Financial Crimes Enforcement Network (FinCEN) and federal depository institutions regulators are allowing community banks and credit unions to collaborate through which they can reduce costs, increase operational efficiencies and leverage specialized expertise.
Safe sharing harbour:
Various financial institutions are uncomfortable for sharing information due to not availability of data protection. To fight money laundering and terrorist financing within the USA PATRIOT Act, it offers protection from liability for adequate information sharing. Sharing and collaboration can save cost and provide many other benefits to financial institutions.
Improve internal Controls:
Customer Identification (name, dob, address, identity verification document), Written Policies, monitoring and reporting processes, systematic procedures have many commonalities across financial organizations. Working together can deliver better AML programs, improve internal controls and lower costs.
Better testing and reviews:
To uncover incorrect assumptions and technical oversights, the review process can help a lot. Working together with other institutions provides many benefits including both parties review each other instead of paying for outside expertise to review and find deficiencies in the system.
Comprehensive training program:
If any organization or institution acquire to keep employees cognizant and up-to-date of the issues to watch for, a comprehensive training program is a must when running an AML program. Updating and reviewing ongoing processes on a routine basis can protect all parties associated with the business.
Suspicious Activity Report:
Regulators use reports to investigate suspicious activities, so reporting suspicious activities is very crucial in any financial institutions. Maintaining tight control over the information is very important, Only on a need-to-know basis, the information should be available. Institutions should make sure who is getting intimate information and for what purpose it is being used with other financial institutions or regulators. Rules for sharing different types of information are different according to policies. Banks can’t afford to be careless in the highly competitive financial industry in today’s strict regulatory environment.