What is AML Screening and Its Importance for Businesses

Anti-money laundering methods are becoming a part of almost every country’s financial guidelines. Governments have highlighted rules and regulations on how companies must approach AML efforts. 

AML is crucial for businesses to prevent financial fraud. An important part of AML regulation is “AML Screening”.

In this guide, we’ll be breaking down what are AML screening and its importance for businesses.

Breaking Down AML Screening

AML Screening, also known as customer screening is the process of reviewing customers before allowing them to interact with a business. AML screening impacts financial institutions the most. AML Screening helps businesses fight against:

  • Terrorist financing
  • Money laundering
  • Funding of other illegal activities

What’s the Need for AML Screening?

When it comes to anti-money laundering, screening is one of the critical components. AML screening ensures customers are who they claim to be. It’s necessary for 2 reasons. 

First off, it’s necessary because almost all government bodies demand it. Secondly, some AML initiatives need financial institutions to communicate with one another through a database. AML screening helps in reducing the risk of fraudulent activities. 

Secondly, AML screening can help companies keep themselves and their customers safe. Not only businesses are required to do so, but it also helps protect a company’s assets.

Problems with AML Screening

As more and more companies have started investing in AML screening, they’re facing a couple of challenges. First and foremost, one of the challenges that businesses face is the increased customer onboarding time. Companies have to screen customers in “real-time”.

Unfortunately, companies that are focusing on AML directives are finding it tough to screen customers in real-time. The onboarding and screening process slows down as there are limited ways to verify customers in real-time.

Moreover, a lot of companies struggle with “over-screening.” Why? Because the systems are more than often outdated and they require information that isn’t for the screening process. The worst part about this is the slowdown happens because of verifying information that isn’t relevant to the AML process.

Another challenge with the screening process is that there are risks of errors in handling and verifying information. A lot of companies have a manual document verification process that isn’t foolproof. There’s no point in AML screening if the verification of information isn’t accurate.

How to Update AML Screening Methods?

Regardless of the fact it’s a government requirement, or a personal choice, keeping up to date with AML screening methods is crucial. Modern technology is often equipped to meet the needs of today’s customers. 

Latest customer verification, document verification, and AML screening methods rely on AI and algorithms to ensure accuracy. By using solutions like DIRO online document verification, companies can trust that the information they’re getting is accurate. This helps in cutting down time during onboarding and prevents the risk of financial fraud.

As AML screening systems are automated, they can help verify customer information in real-time. With the right combination of tools, companies can do away with manual verification methods altogether.