Handling the New AML Compliance Challenges With Latest Payment Methods

The global prepaid card market will reach $3.65 trillion by 2022. It is also expected to grow more based on the advancement in technologies and with customers slowly moving towards digital and cashless economy instead of old methods of cash and cheque. These latest payment methods are crucial for building vital cash flow for businesses and they can even be used for government relief programs. Although, there are a lot of risks involved in these latest online payment methods and for the users who indulge in these payment methods.

Prepaid cards can be filled with money, can be used globally, and are much easier to set up in comparison to other types of cards. Users who utilize these payment methods can be open to exploitation. Hackers who use sophisticated methods can easily take advantage of the anonymity provided by these cards.

Reducing the Risk of New Payment Methods

According to some reports, the fraud revolving around different types of prepaid cards reached around $103 million. This amount of fraud is in the United States alone. Financial services and institutions rely on old, manual, and insecure technology to monitor the transactions and verify customer identities to reduce the number of frauds. If a lot of regulations are enforced in place, it will make it tougher for hackers to combat fraudulent card activities.

The best thing is that reducing the risk faced by new payment methods and prepaid cards is not only possible, it can also be really easy to reduce risks by using the right kind of technology. Making use of automated technology that can give you real-time insights into the frauds, reduce false positives and provide a holistic view of users to improve a positive customer experience.

The best methods of reducing frauds need to have all the components to help you meet up with verification and AML compliance. Technologies like DIRO’s document verification technology can be utilized to verify documents in real-time during the onboarding process and reduce the risk of fraud. Businesses can utilize the DIRO’s document verification technology to improve their chances of reducing fraud.

Challenges Faced To Reduce Risks In Handling the New AML Compliance Challenges

1. Digitization of Products and Complex Payment Streams

Keeping up with new technological advancements is one of the major concerns of financial institutions. In the past, there was a major reliance on manual methods to accomplish tasks, it left a lot of room for error and there was a lot of room for false positives. Manual methods leave the process of detecting financial crime ineffective. 

Regardless of constant technological growth, countless steps of operational and AML compliance decisions are made manually every day. Spending resources on unnecessary investigations and using human analysts for every decision costs Financial institutions billions of dollars each year.

2. Increasingly Sophisticated Hackers and Criminal Networks

Financial institutions aren’t the only ones who are utilizing advanced technological methods. Hackers and criminal groups are also improving their methods for scamming people. Almost every new day we see new AML threats arising from digitization, financial criminals are benefiting from this improvement in technologies and they are becoming better.

Criminals make use of complex networks, exploiting weak points in the operations of banks, latest payment methods such as prepaid cards and capital markets.

Same as with most types of crime, when one method of money laundering becomes tougher to accomplish, financial criminals will find newer methods of executing the crime. All types of financial institutions have to update their AML compliance to make sure they stay ahead of criminals.

3. Expanding Volumes of Data

Another challenge that financial institutions face is the volume and breadth of data. There will be more than 175 zettabytes of data used by 2025. However, as the amount of data keeps expanding, financial institutions keep struggling to harness its value.

Criminal organizations often launder money between several networks at the same time to make sure they aren’t spotted by financial institutions. Using machine learning and AI-based technology, banks and other financial institutions can find out suspicious activities and reduce the risk of financial fraud.

How DIRO Helps in Handling the New AML Compliance Challenges?

Following all the latest AML regulations can be a huge task for financial institutions as they keep changing with time. Banks, financial institutions, and FinTechs need to employ the latest payment methods and they also need to utilize the latest technologies meant to increase security.

DIRO’s document verification technology can be used to verify documents instantly. To reduce the risk for fraud, institutions can verify any kind of documents during the customer onboarding process. The technology can verify address proof, utility bills, bank statements, and even student records. To minimize the risk of fraud, these organizations can improve their chances of figuring out suspicious activities and can reduce the risk of financial crime.

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