Financial Crime World

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High-Risk Countries: Where Money Laundering Meets Higher Risks

As the global economy continues to grow, money laundering and other financial crimes have become increasingly prevalent. In a world where high money laundering rates are common, transactions involving higher-value deals can pose greater risks than those closer to home.

To combat these risks, companies must implement robust know-your-customer (KYC) procedures that verify potential customers’ location and identity, as well as assess their overall level of risk based on the type and nature of their transaction. This includes ongoing monitoring for any unusual activity, such as changes in transaction volumes or destinations.

Traditional KYC policies focus on collecting customer data and comparing it to government watch and sanctions lists. However, with the adoption of digital and online KYC frameworks, companies can now adopt a risk-based approach that evaluates potential risks before creating accounts and completing transactions.

A Risk-Based Approach

This approach allows organizations to separate customers across three levels of identity due diligence:

  • Basic: Applies to most customers
  • Simplified: Used for low-value or low-velocity transactions between known accounts
  • Enhanced: Required for high-value transactions or those involving countries with high rates of money laundering

Five Steps to Streamline KYC Compliance

While there is no one-size-fits-all approach to KYC compliance, we have identified five key steps that can help streamline the process:

  1. Identify where you need KYC: Determine whether your business requires KYC compliance and implement procedures accordingly.
  2. Determine your preferred KYC method(s): Choose the most suitable KYC methods for your business, considering factors such as current operations and infrastructure.
  3. Account for all three KYC components:
    • Customer due diligence (CDD)
    • Ongoing monitoring
    • Risk mitigation strategy
  4. Create an effective risk mitigation strategy: Develop a plan that outlines specific KYC actions based on assessed risk levels to mitigate the impact of evolving risks.
  5. Find an identity verification partner: Partner with a provider that can help streamline the identity verification process without compromising company or customer security.

By following these steps, companies can create an effective KYC program that reduces complexity and ensures compliance with AML regulations. In today’s global economy, it is crucial to prioritize KYC compliance to prevent financial crimes and keep customers safe.

Ready to Learn More?

Connect with Unit21 and discover how we can help kickstart your KYC compliance journey. Our regulatory technology solutions will keep you on top of all AML regulations, allowing you to integrate sophisticated identity verification while offering frictionless onboarding that users love.