5 Reasons Why Ongoing Monitoring is Important for AML Compliance

5 Reasons Why Ongoing Monitoring is Important for AML Compliance

When it comes to dealing with money and transactions, it’s extremely important to work in an environment that is honest and safe. This is very important when it comes to complying to the AML guidelines. Ongoing or continuous monitoring allows organizations to catch any suspicious activity related to the flow of money immediately. This saves them from being associated with criminal activities like financing terrorism or laundering money. It means continuously checking out client accounts, exchanges, and ways of behaving for any unusual signs, even after the first checks are finished. By continuously keeping an eye on transactions and how clients act, banks can detect anything unusual and make a move to moderate risks.

Studies have shown that powerful ongoing monitoring can decrease the risk of money laundering by up to 80%.

The process of ongoing monitoring involves analyzing data about transactions, client profiles, and behavior patterns to recognize irregularities that might point toward money laundering practices. This includes monitoring enormous transactions, continuous transactions to high-risk areas, and strange changes in transactional behavior.

Ongoing monitoring does bring a few difficulties for financial institutions. The huge volume of exchanges, and changing money laundering strategies, makes it challenging to recognize suspicious practices. In addition to this, false positives can overburden compliance groups, leading to a waste of time and money.

Want to know more about the role of ongoing monitoring in AML compliance, read this blog and learn about enhanced ongoing monitoring.

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5 Reasons To Perform Ongoing Monitoring

Here is why ongoing monitoring completes AML Compliance:

  1. Detection of Suspicious Activities: Ongoing monitoring helps in recognizing suspicious patterns and ways of behaving in financial exchanges. By continuously analyzing clients and information about transactions, financial institutions can recognize the odds that might indicate money laundering or terrorist financing exercises.
  2. Compliance with Regulatory Requirements: Administrative authorities require financial institutions to execute strong AML compliance programs, which include ongoing monitoring. Following these rules keeps companies from getting in trouble, facing legal problems, and damaging their reputation because of non-compliance
  3. Mitigation of Risks: Ongoing monitoring helps financial institutions to stop illegal practices like laundering money and terrorist financing. They can stop such activities as soon as they are identified. This saves them from financial losses, maintains their reputation and the integrity of the financial framework.
  4. Enhanced Customer Due Diligence: Ongoing monitoring facilitates enhanced customer due diligence and helps banks understand how customers act and spend money over time.  This allows them to keep a check on their clients’ risk profiles and notice any changes in the customer’s behavior.
  5. Prevention of Financial Crime: Ongoing monitoring stops money launderers and terrorist financiers from using the banks for illegal purposes. When banks stay alert and quickly act on suspicious activities, they help keep the financial system safe and reliable.

Read more about the advantages of ongoing compliance monitoring and AML compliance programs.

How is Ponzi Scheme Relevant?

Bernie Madoff ran a Ponzi scheme for many years and was successful in tricking investors and taking out billions of dollars. Mardoff was using the J.P. Morgan bank for more than 20 years and dealing with billions of dollars.

Despite lots of warning signs, J.P. Morgan didn’t watch Madoff’s account, “Account 17013”. These signs included super high profits, lots of money moving in and out, putting too much money in one investment, and concerns from J.P. Morgan employees that nobody bothered looking into.

Madoff’s scheme broke down in 2008, showing everyone the fraud and making investors lose loads of money.  J.P. Morgan faced criticism and legal consequences. They had to pay $2.6 billion in fines and settlements to authorities and victims, admit to breaking two serious laws violating the Bank Secrecy Act and their brand image suffered due to association with the scandal.

Key Takeaway to Remember

Since criminals including money launderers are continuously changing their tricks, the ways for watching out for them need to change too. Financial institutions need to remain updated on the techniques of money laundering and the changing guidelines to change their monitoring techniques.

Ongoing monitoring isn’t just about following the guidelines — it’s more about keeping your cash protected and clean. By monitoring financial exercises, institutions can defend the integrity of the financial framework and moderate the risks related to money laundering and terrorist financing. By making use of technology, creating a culture of compliance, and continuous improvement, financial institutions can improve their ongoing monitoring practices and maintain the highest standards of integrity and transparency.

Now that you know what is ongoing monitoring and its importance in AML compliance, are you ready to elevate your business’s compliance level? Visit AML Watcher and explore their screening systems that can help you comply with regulatory requirements.

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