KYC and AML: Differences and How They Work Together

We might not notice, but staying compliant with rules and regulations is a big challenge. Regardless of the company or practice you are involved in; you are always expected to adhere to the set laws. Legal regulations change regularly, and keeping up with them is confusing and time-consuming. But do we really need government laws to protect our business from fraud? Well, traditional ways of conducting businesses say otherwise. Earlier, people used to trust the customers probably because of less greed and fraud. Today, the situation has taken a turn. The greed and scams have skyrocketed and made it hard to trust all the customers. 

Amidst all the trust issues, most companies started following KYC objectives. Simply put, the institutions and businesses at risk of money laundering do a thorough background check of all the customers and then proceed with the dealings. This is a lengthy yet effective method to prevent financial fraud. 




Before getting into the in-depth explanations, let’s understand what KYC and AML are-

AML


Anti-money laundering, as the term evinces, is the steps or trials companies and financial institutions go through to prevent financial breaches. Anti-money laundering regulations are specifically designed to avoid terrorist financing, illicit financial activities and other crimes like human trafficking.

People indulged in conducting illegal activities can be easily stopped by checking their records and performing necessary sanction screening. 


KYC

Know Your Customer is a company or an institution's process to keep financial breaches out. The process ensures that the customers match their displayed identity and are not a fraud. KYC is a process that falls under the umbrella term AML. Irrespective of their application in different ways and uses, KYC and AML, go hand in hand to eradicate the same cause. 


How are KYC and AML different?


If we take both concepts in a broad spectrum, they aim at the same goal but work differently. AML combines all companies and institutions' efforts to reduce money laundering risk. At the same time, KYC is the customer identification and screening process to prune the risk elements. It helps eliminate the risk of fraud and money laundering. 


Role of KYC and AML in Financial Institutions


Financial institutions attract the most money laundering cases. The institutions deal with finances for the whole day and have so much on their plate. However, with the adoption of the right AML software and accepting the right KYC objectives, most companies have reinforced their security. 
The institutions thoroughly screen the customers to see if they are a safe addition. 


AML-TRACE


Companies today have limited time to go through customer identification. So, they are adopting AML software to speed up the process. Smart Infotech comes forward with the best AML software named AML-TRACE. The software helps in identifying high-risk customers and avoiding their dealings. The software is a great addition to all types of companies, businesses, and financial institutions. It helps you save time and effort and brings accuracy in identifying the risk factors. 

Get in touch with us to know more about our software. 

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