Ongoing Monitoring: Managing the Risk of Financial Crimes
Money laundering dates back to the 20th century when the global economy bore due to organized crime. Even today, it is no less than a major concern for financial institutions and other businesses. Adding more to it, with the advancing technology, criminals are walking ahead of how they were before.
For financial institutions and businesses to walk a step ahead, it is necessary to employ relevant and state-of-the-art measures for AML monitoring. If you are also looking to secure your business, let this article help you:
The Concept of Ongoing Monitoring
Ongoing monitoring refers to an organization's measure to ensure safe business relationships. It involves monitoring the reputation of the customers and their regularity with anticipated behavior patterns.
The process of ongoing monitoring can allow your organization to safeguard against criminal threats, which can also cause reputation loss and non-compliance.
Here are the other reasons you need it:
Client Profiles
Changes in your customers' profiles can be one reason for ongoing monitoring. As a part of your business, you may have to deal with clients outside your nation. This adds to your need to ensure compliance requirements and avoid financial crime threats. Ongoing monitoring and KYC measures work to protect your business's health and reconsider your risk management plans.
Sanctioned or High-Risk Nations
Many nations have a list of sanctioned entities with whom they decide not to indulge in any business. However, some countries may not have a watch list and are vulnerable to terrorism financing and money laundering. They could be subject to constantly changed governments and internal issues. That is where your need to address and prevent money laundering issues come from.
Risk Management
Your business clientele can include politically exposed parties(PEP) or others associated closely or ones belonging to high-risk industries. Categorizing them as highly risky, you should stay updated with changes in their profiles. Undoubtedly, your business needs to check the risk exposure of your customers.
Post-Covid Impact
The entire globe has undergone a dramatic shift following the COVID-19 pandemic. From financial to economic changes, everyone saw the impact. Due to unemployment, many individuals and criminal organizations decided to use non-profits and other firms as mediums to conduct fraudulent activities. Next, due to the unpredictability of the market, the price of cryptocurrencies rose, too, causing bad actors to use virtual wallets to hide their money.
Businesses in monetary transactions have also seen a rise in their transactions. An increase in the demand for digital payments boosted growth for eCommerce and digital wallets. These organizations fall under the risks of terrorist financing and anti-money laundering.
Conducting Ongoing Monitoring
You can regard the duration of ongoing monitoring as per the risk level for a customer as per your risk appetite. Clients falling under less risk may not require frequent monitoring, but your need to be precautious rises with high risks. In addition to what's necessary, you may be extra careful with high-risk customers. You might also require to include the frequency of ongoing monitoring KYC in your policies and processes.
The Bottom Line
With the rapidly advancing technology, cybercriminals are playing smart to conduct financial crimes. And to safeguard against them, businesses need to use advanced methods for AML monitoring. In this article, you have become familiar with the role of continuous monitoring in identifying and protecting against them and other threats to your organization.
Employing AML software can be a smart move to perform ongoing monitoring. It can lower your costs, enhance overall productivity, and allow you to check the pool of other features available. Moreover, as mentioned above, the boost in financial crimes after COVID-19 makes using one a necessity for your organization.
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