Anti Money Laundering (AML)

What is Anti Money Laundering (AML)?

Anti Money Laundering (AML), also known as anti-money laundering, is the execution of transactions to eventually convert illegally obtained money into legal money. Although you as a company stick to the rules, this does not mean that your partners and business associates  adhere to the same AML compliance laws as you. Particularly in international business, you run the risk that the companies or individuals with whom you do business are not in compliance with the anti money laundering regulations set by the government. Conducting a  due diligence investigation on your partners, suppliers but also customers is therefore essential.

Stages of anti-money laundering

The money laundering process includes 3 stages: Placement, Layering, and Integration.

1. Placement puts the "dirty cash" into the legitimate financial system and at the same time, hiding its source.
2. Layering or “structuring” hides the source of the money through a series of transactions and accounting tricks. This activity involves breaking the funds into small transactions and makes it difficult to detect the laundering activity.
3. In the final step, integration, the now-laundered money is withdrawn from the legitimate account and real records to be used for whatever reasons the criminals have as a top priority for it.

Anti Money laundering act, laws or AML legislation is becoming increasingly strict for financial service providers. They must be prevented from financial crimes, financial action and / or terrorism.

AML activities, then, aim to fight this ongoing issue by establishing processes, policies and enforcement of  anti money laundering checks, regulations and laws that require businesses to actively monitor the entities with whom they do business. They target such practices as market manipulation, illegal goods trading, tax evasion, bribery, securities fraud and other forms of financial corruption under secrecy act.

The 5th EU AML Directive

To combat money laundering as well as counter-terrorism financing (CTF), the European Parliament recently adopted the 5th Anti-Money Laundering Directive. Rather than a new law, this directive is an amendment to the EU’s 4th Anti-Money Laundering Directive, which aims to bring greater transparency to the financial system and prevent its use for the funding of criminal activities. Countries like Afghanistan has the highest money laundering risk score 8.16 followed by Haiti (8.15), Myanmar (7.86), Laos (7.82), Mozambique (7.82), Cayman Islands (7.64), Sierra Leone (7.51), Senegal (7.30), Kenya (7.18), Yemen (7.12).

The directive addresses such areas as:

• regulation of virtual currencies
• information on beneficial owners (persons who reap the benefits of ownership even though the title of a given property is in someone else’s name)
• use of anonymous prepaid cards
• powers of financial intelligence units (FIUs) – entities that help investigate and prosecute serious criminal activities, such as money laundering, terrorism financing, tax evasion, organised crime and financial crimes
• stricter due diligence requirements for business relationships or suspicious transactions that involve high-risk countries

EU member states, including the UK, must begin the enforcement of necessary anti-money laundering regulations and laws and comply with the directive by 10 January 2020. The United Kingdom remains the global money-laundering capital with an estimated £90 billion laundered each year through the City of London.

Nexis Diligence+™

Nexis Diligence+^™ AML solutions let you conduct enhanced due diligence, anti-money laundering checks, risk and compliance checks and comprehensive research to investigate and monitor third parties, customer identification and other entities with whom you do business. Using the anti money laundering online supervision account and due diligence software/tools means you can stay compliant with international AML procedures and safeguard your business. The tools give you access to an unparalleled collection of global news and information all in one place, including:

• more than 150 databases of premium business information
• millions of public and private company profiles covering developed and emerging markets
• politically exposed person (PEP) lists, international sanctions lists and watchlists
• more than 26,000 current news sources from newspapers, blogs, and newswires, as well as an archive that dates back 40 years
• the LexisNexis^® database of international court cases and decisions
• risk-analysis reports
• more than 500 biographical sources and executive profiles

What’s more, the Diligence+ built-in report builder enables to you to produce customized time- and date-stamped reports to demonstrate your ongoing compliance efforts should you undergo any type of regulatory audit.
Ultimately, with a complete picture of the people and companies you’re dealing with, you’ll improve your decision-making power and be able to safeguard and grow your business with confidence using third party due diligence software - Nexis Diligence+^™.