Introduction to Fraud and AML

Fintechs and financial institutions should all deploy appropriate measures to counter AML and fraud risks. We know it’s unfortunately easier said than done, but here are a few tips on how to comply with the best market practices!

Anti Money Laundering

AML practices aim at preventing the injection, in the financial system, of funds used to commit or obtained by committing crimes.
AML is a broad topic, covering the following obligations :

  • KYC (Know your customer) / KYB (know your Business) / KYS (Know your supplier) : collecting the necessary data to ensure you know who you are in business with
  • PEP / Negative news screening at the onboarding and periodically over the customer’s lifecycle to compile additional info into the risk profile.
  • Sanction / Embargo screening at the customer onboarding and periodically afterwards, as well as on incoming and outgoing transactions, to ensure strict compliance with international sanctions; and prevent terrorism funding.
  • Profile and transaction monitoring to detect and report changes in usage, abnormal activities and unexplainable movements to the authorities.

Creating a customer risk profile at the onboarding and updating it over time is key to establish a solid AML plan. It is also one of the most useful data to leverage with monitoring tools like Marble!

Fraud fighting

Because it starts gradually and, often, with negligible effects in its early stages, fraud is too often overlooked at the beginning of a company’s life. However, as one of our competitors rightly stated: “Fraud is no one’s subject until it becomes the only subject”.

It can indeed have devastating effects on your corporate image and quickly strain relationships with your stakeholders, that is, your clients and all other financial institutions sharing your space.
It can also generate tangible losses on your balance sheet, impacting your revenues and profits.

Fighting fraud is, unfortunately, made incredibly complicated by its wide variety of sources and patterns. The best way to address it is to take them into account when building your risk cartography to make sure that you are not only aware of them, but also implementing the correct countering measures before the impact on your company becomes too great.