Jan 25
7 min read

What is AML and Compliance in Fraud Prevention

Learn about what is AML Compliance and how all businesses, big or small, need to stay on top of the law.

What is AML and Compliance in Fraud Prevention

Governments, policies, and technology continue to advance to keep illegal funds out of the legitimate financial system, but it’s not easy.

According to the Inter-American Development Bank (IDB), it is estimated that the amount of money from crime and corruption laundered in shell companies is between 2 and 5% of global GDP each year. That's roughly between $800 billion and $2 trillion.

Yes, international crime moves more money than many sovereign economies.

That is why a constant renewal of Anti-Money Laundering (AML) laws and policies are needed as a much more public and private commitment to comply with them.

What is AML Compliance? 

Anti-Money Laundering Compliance is a set of regulations and procedures that financial institutions follow to prevent, detect, respond to, and eliminate inherent and residual money laundering, terrorist financing, and fraud-related risks.

As you can imagine, for the financial, FinTech, banking, and crypto sectors, complying with International Standards on Combating Money Laundering is not an option, but a legal obligation.

What is an AML Compliance Program?

For the reasons above it is required to implement an AML program that combines all the AML regulatory compliance standards: integrated internal operations, user processing policies, monitoring and detection of accounts, and reporting of money laundering incidents.

What should an Anti-Money Laundering compliance program be like?

  • Flexible, because money laundering and terrorist financing risks vary across jurisdictions, products, and delivery channels over time.
  • Effective, because companies are better equipped than legislators to effectively assess and mitigate the particular money laundering and terrorist financing risks they face.
  • Proportional, because a risk-based approach promotes a smart way to fight money laundering rather than a check-the-box approach. It also allows companies to minimize the adverse impact of anti-money laundering procedures on their low-risk customers.

Why is it urgent to adopt an AML Compliance Program?

Well, history has shown us that illegal money can be hidden behind just about anything. And no, you don't have to go to the other side of the world to discover alarming cases.

The United Nations estimates that 22% of the 600,000 million dollars that are laundered each year in the world are laundered in the Americas.

Money laundering all over the Americas

Casinos, exchange houses, hotels, jewelry, luxury cars, real estate, yachts, and even cattle have been on the list of illicit money; in fact, it would be reckless to presume that there is a place where there is no money laundering.

However, let's see where the largest amount of Dirty Money has been hidden on our continent.

Banks

HSBC Bank allowed Mexican and Colombian drug traffickers to launder at least $881 million in the US financial system between 2006 and 2010.

The fine imposed by American justice was 1.900 million dollars and has been considered the largest sanction ever imposed on a financial group for its permissiveness with criminals.

Art

In 2006 the Brazilian economist and banker Edemar Cid Ferreira bought more than 90 works of art with dirty money, including “Hannibal'' by Jean Michel Basquiat. His goal was to launder the money in the US by declaring that the value of each piece was $100.

After several investigations, he was found guilty and sentenced to 21 years in prison for financial crimes, money laundering, and criminal association.

Influencers

In 2022, United States authorities arrested influencers Ilya Lichtenstein and Heather Morgan “@Razzlekhan” for participating in an operation to launder hundreds of millions of dollars in Bitcoin.

According to the US Department of Justice, the influencers "conspired to launder the proceeds of 119,754 bitcoins that were stolen from the Bitfinex platform".

 

Construction Firm

Between 2009 and 2015, Brazilian construction company Odebrecht laundered $788 million through false contracts managed by shell companies from the industry to transfer bribes to public officials and politicians from 12 Latin American countries.

These actions were carried out through the so-called "Structured Operations Sector", created by the Odebrecht Group to hide the money trail and deliver it clean to the final recipients.

 

Football Club

In the 80s, the America de Cali football club received large amounts of money from drug trafficking, actually, from two of its shareholders: the Rodríguez Orejuela brothers, who were also the main leaders of the Cali Cartel.

The team quickly became one of the best in Colombia and the continent until 1995, when the US Department of the Treasury included it in the "Clinton List", a list of companies globally banned for being linked to illicit businesses.

 

Law Firm

In 2017, more than 11 million documents leaked from the Panamanian law firm Mossack Fonseca. Panama Papers revealed how this firm helped its clients hide their wealth, launder money and evade sanctions and taxes.

The operation was carried out through 214,000 shell companies in 200 countries and benefited more than 500 banks and 140 politicians, including 12 presidents and former presidents.

 

What does a business need to be AML compliant?

AML implementation is mainly about commitment, culture, values, norms, and ethics. So once all of this gets in the company's DNA, you can focus on the AML requirements that will help you expose bad actors and stay safe from penalties. 

AML program requirements:

  • Have a system of policies, procedures, and internal controls against fraud.
  • Design effective suspicious activity reports (SARs). 
  • Monitor customer transactions and evaluate client risk profiles.
  • Have AML-trained employees capable of identifying suspicious transactions.
  • Designate an AML compliance Officer within the company.
  • Implement KYC and CDD processes.
  • Stay up-to-date on AML policies and regulations.
  • Conduct continuous reviews, controls, and audits at all levels inside the organization.

The cost of not implementing an AML Compliance Program

Besides facing strong administrative sanctions, organizations that do not comply with AML regulations can damage their reputation and lose clients.

We know that it’s almost impossible for any business associated with corrupt people to recover from the negative image its users perceive.

AML fines paid in 2021 by organizations that failed to comply with AML regulations reached $2.7 billion.

MetaMap: AML Compliance end-to-end

MetaMap is the solution that integrates and scales your AML compliance and risk management operations end-to-end.

How?

Through workflows, customizable merit blocks that can be pre-built like Onboarding or KYC, as well as ID Card fraud detection, validation of National ID, Biometrics, and of course AML checks.

Some of our merits include:

  • ID Document Fraud Detection

KYC processes are performed in real-time and in seconds through MetaMap. Users upload images of one or more documents for verification and we check to determine if the document is valid, belongs to the user, and can be trusted.

  • AML Watchlist

Our AML Watchlist merit checks your users against more than 1,200 international watchlists, sanctions lists, and politically exposed persons (PEP) lists to protect you from onboarding users who might be criminals, terrorists, money launderers, fraudsters, or PEPs.

  • Government Check

The Government Check merit verifies that the data your users submit matches official government records. MetaMap has connections with official government sources from countries in South, Central, and North America.

  • Bank Account Data

Our Bank Account Data merit allows your users to share their financial data with you so you can verify their financial reputation. The information will cover data such as ID, Accounts, Transactions, and Balance.

Come for simplified compliance

With the solutions we have at MetaMap you will comply with the AML plan, mitigate fraud risks faster and make accurate reports of suspicious cases.

Not only that, but because of our workflows, you can reduce the time of development and integration by 80%.

Want to know more about how to stay compliant and create your verification process? Talk to one of our experts today and get started.

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AML

What is AML and Compliance in Fraud Prevention

Learn about what is AML Compliance and how all businesses, big or small, need to stay on top of the law.

7 min read

— Published on

January 25, 2023

Governments, policies, and technology continue to advance to keep illegal funds out of the legitimate financial system, but it’s not easy.

According to the Inter-American Development Bank (IDB), it is estimated that the amount of money from crime and corruption laundered in shell companies is between 2 and 5% of global GDP each year. That's roughly between $800 billion and $2 trillion.

Yes, international crime moves more money than many sovereign economies.

That is why a constant renewal of Anti-Money Laundering (AML) laws and policies are needed as a much more public and private commitment to comply with them.

What is AML Compliance? 

Anti-Money Laundering Compliance is a set of regulations and procedures that financial institutions follow to prevent, detect, respond to, and eliminate inherent and residual money laundering, terrorist financing, and fraud-related risks.

As you can imagine, for the financial, FinTech, banking, and crypto sectors, complying with International Standards on Combating Money Laundering is not an option, but a legal obligation.

What is an AML Compliance Program?

For the reasons above it is required to implement an AML program that combines all the AML regulatory compliance standards: integrated internal operations, user processing policies, monitoring and detection of accounts, and reporting of money laundering incidents.

What should an Anti-Money Laundering compliance program be like?

  • Flexible, because money laundering and terrorist financing risks vary across jurisdictions, products, and delivery channels over time.
  • Effective, because companies are better equipped than legislators to effectively assess and mitigate the particular money laundering and terrorist financing risks they face.
  • Proportional, because a risk-based approach promotes a smart way to fight money laundering rather than a check-the-box approach. It also allows companies to minimize the adverse impact of anti-money laundering procedures on their low-risk customers.

Why is it urgent to adopt an AML Compliance Program?

Well, history has shown us that illegal money can be hidden behind just about anything. And no, you don't have to go to the other side of the world to discover alarming cases.

The United Nations estimates that 22% of the 600,000 million dollars that are laundered each year in the world are laundered in the Americas.

Money laundering all over the Americas

Casinos, exchange houses, hotels, jewelry, luxury cars, real estate, yachts, and even cattle have been on the list of illicit money; in fact, it would be reckless to presume that there is a place where there is no money laundering.

However, let's see where the largest amount of Dirty Money has been hidden on our continent.

Banks

HSBC Bank allowed Mexican and Colombian drug traffickers to launder at least $881 million in the US financial system between 2006 and 2010.

The fine imposed by American justice was 1.900 million dollars and has been considered the largest sanction ever imposed on a financial group for its permissiveness with criminals.

Art

In 2006 the Brazilian economist and banker Edemar Cid Ferreira bought more than 90 works of art with dirty money, including “Hannibal'' by Jean Michel Basquiat. His goal was to launder the money in the US by declaring that the value of each piece was $100.

After several investigations, he was found guilty and sentenced to 21 years in prison for financial crimes, money laundering, and criminal association.

Influencers

In 2022, United States authorities arrested influencers Ilya Lichtenstein and Heather Morgan “@Razzlekhan” for participating in an operation to launder hundreds of millions of dollars in Bitcoin.

According to the US Department of Justice, the influencers "conspired to launder the proceeds of 119,754 bitcoins that were stolen from the Bitfinex platform".

 

Construction Firm

Between 2009 and 2015, Brazilian construction company Odebrecht laundered $788 million through false contracts managed by shell companies from the industry to transfer bribes to public officials and politicians from 12 Latin American countries.

These actions were carried out through the so-called "Structured Operations Sector", created by the Odebrecht Group to hide the money trail and deliver it clean to the final recipients.

 

Football Club

In the 80s, the America de Cali football club received large amounts of money from drug trafficking, actually, from two of its shareholders: the Rodríguez Orejuela brothers, who were also the main leaders of the Cali Cartel.

The team quickly became one of the best in Colombia and the continent until 1995, when the US Department of the Treasury included it in the "Clinton List", a list of companies globally banned for being linked to illicit businesses.

 

Law Firm

In 2017, more than 11 million documents leaked from the Panamanian law firm Mossack Fonseca. Panama Papers revealed how this firm helped its clients hide their wealth, launder money and evade sanctions and taxes.

The operation was carried out through 214,000 shell companies in 200 countries and benefited more than 500 banks and 140 politicians, including 12 presidents and former presidents.

 

What does a business need to be AML compliant?

AML implementation is mainly about commitment, culture, values, norms, and ethics. So once all of this gets in the company's DNA, you can focus on the AML requirements that will help you expose bad actors and stay safe from penalties. 

AML program requirements:

  • Have a system of policies, procedures, and internal controls against fraud.
  • Design effective suspicious activity reports (SARs). 
  • Monitor customer transactions and evaluate client risk profiles.
  • Have AML-trained employees capable of identifying suspicious transactions.
  • Designate an AML compliance Officer within the company.
  • Implement KYC and CDD processes.
  • Stay up-to-date on AML policies and regulations.
  • Conduct continuous reviews, controls, and audits at all levels inside the organization.

The cost of not implementing an AML Compliance Program

Besides facing strong administrative sanctions, organizations that do not comply with AML regulations can damage their reputation and lose clients.

We know that it’s almost impossible for any business associated with corrupt people to recover from the negative image its users perceive.

AML fines paid in 2021 by organizations that failed to comply with AML regulations reached $2.7 billion.

MetaMap: AML Compliance end-to-end

MetaMap is the solution that integrates and scales your AML compliance and risk management operations end-to-end.

How?

Through workflows, customizable merit blocks that can be pre-built like Onboarding or KYC, as well as ID Card fraud detection, validation of National ID, Biometrics, and of course AML checks.

Some of our merits include:

  • ID Document Fraud Detection

KYC processes are performed in real-time and in seconds through MetaMap. Users upload images of one or more documents for verification and we check to determine if the document is valid, belongs to the user, and can be trusted.

  • AML Watchlist

Our AML Watchlist merit checks your users against more than 1,200 international watchlists, sanctions lists, and politically exposed persons (PEP) lists to protect you from onboarding users who might be criminals, terrorists, money launderers, fraudsters, or PEPs.

  • Government Check

The Government Check merit verifies that the data your users submit matches official government records. MetaMap has connections with official government sources from countries in South, Central, and North America.

  • Bank Account Data

Our Bank Account Data merit allows your users to share their financial data with you so you can verify their financial reputation. The information will cover data such as ID, Accounts, Transactions, and Balance.

Come for simplified compliance

With the solutions we have at MetaMap you will comply with the AML plan, mitigate fraud risks faster and make accurate reports of suspicious cases.

Not only that, but because of our workflows, you can reduce the time of development and integration by 80%.

Want to know more about how to stay compliant and create your verification process? Talk to one of our experts today and get started.

Get the latest news from The Map

Get all product updates and industry news directly in your inbox. It’s free!

Thank you! You have successfully subscribed to our newsletter!

Oops! Something went wrong while submitting the form.