Understanding, implementing and evolving: The three steps to AML compliance

The number of AML-related fines in the UK rose from four to fourteen last year as financial institutions were fined $5bn globally for money laundering violations.

The Financial Conduct Authority has heightened its attention on companies  in charge of anti-money laundering compliance through enforcement actions, such as fines and investigations, and in severe cases, prosecution.

This increased focus on anti-money laundering compliance is putting pressure on property dealers. Regardless of their intentions, they are aware of the significance of having proper processes in place to avoid costly fines and potential legal actions.

Understanding compliance, implementing appropriate technology, and evolving these processes will be crucial for companies looking to avoid reputational harm and maintain financial stability. Technology has proven to be a valuable development in handling these issues, with compliance software being able to fully automate the process, slashing admin time and costs whilst giving estate agents peace of mind.

Here are three steps to successful AML compliance.

Step 1: Understand compliance regulations and processes

Understanding compliance regulations and processes is crucial for businesses. Compliance regulations are designed to ensure that businesses adhere to ethical, legal, and social standards. Failure to comply with these regulations can result in hefty fines, legal liabilities, and reputational damage.

The top five challenges compliance practitioners expected to face in 2022 were the volume and implementation of regulatory change, a lack of budget and resources, the availability of skilled resources, the need for effective compliance monitoring and cyber resilience. Although these present a myriad of challenges, the first step to solving them is truly understanding the process.

Conveyancers should prioritise ensuring that every member of the team is up to speed regarding compliance processes. This can be done by conducting research to understand the regulatory environment, training staff on best practices or regularly auditing the industry to keep up with changes. By understanding compliance regulations and processes, businesses can proactively identify and mitigate risks, avoid costly penalties, and maintain the trust of their customers. Additionally, this understanding can help agencies become more agile by streamlining their operations, reducing inefficiencies, enabling them to quickly adapt to changing regulatory requirements.

By streamlining these processes, businesses can also reduce the time and resources required to meet obligations, freeing up time and resources to focus on other strategic priorities.

This ability to quickly respond to regulatory changes can help agencies better serve their customers by providing a better customer experience. This gives conveyancers peace of mind throughout the process, by being ready for whatever changes they need to manage, and all parties are comforted with a clear process.

  1. Implement  the right technology

After understanding the regulatory procedures, it is crucial to get your internal house in order and put in processes that will grow with your business. A viable solution to achieve this is by utilising appropriate technology in your processes. As shown by the UK Treasury Report, despite advancements in technology, industry and government are still concerned that the potential to enhance AML controls and systems through innovation is not being fully utilised. This may lead to inefficiencies, as organisations continue to use compliance procedures that require more resources and may be less proficient in detecting customers or suspicious activity. Moreover, the latest technological innovations are not being employed to combat financial crime.

Implementing software can help to streamline and automate the compliance process, reducing the need for manual intervention and speeding up the onboarding process. The software can be programmed to follow predefined workflows and standard operating procedures, reducing the risk of errors or inconsistencies. It can also track technology-based transactions at the same speed and volume as they occur, something that humans are unable to do.

It can also significantly enhance auditability, the ability to track and verify the accuracy and completeness of financial transactions. AML technology can automate and standardise compliance procedures, providing a transparent and consistent record of all activities. This technology can enable auditors to quickly and easily access the AML data they need, reducing the time required for audits and increasing the accuracy of audit results. The automation of this process ensures the right information is available in the right format, removing the manual burden associated with these tasks and enabling better pass rates.

Finally, implementing software can be an effective way to embed an excellent customer experience in the Know Your Customer (KYC) and Know Your Business (KYB) processes while ensuring nothing slips through the cracks.

By identifying the key touchpoints in the KYC/KYB processes and evaluating how software can be used to optimise each touchpoint (such as with follow-up reminders to complete ID verification), it can simplify the onboarding process, providing real-time status updates, or enabling customers to easily upload and submit required documents. This can result in a faster and more efficient customer experience, which can improve customer satisfaction and loyalty.

Technology can also be user-friendly and accessible, regardless of the device or platform used by the customer. Businesses can establish clear workflows and standard operating procedures that ensure the software is used consistently across all customer interactions.

Overall, software can provide valuable insights and analytics that can help businesses to identify areas for improvement in their KYC/KYB processes. By analysing customer data and feedback, businesses can make informed decisions about how to optimise their processes to provide a better service overall.

  1. Evolving compliance 

Once teams understand compliance and the software is implemented, businesses will then be able think beyond this process and evolve their anti-money laundering process to build further trust with customers and ensure they continue to do the right thing.

Property firms can leverage their AML programme to build trust with customers by being transparent about their compliance processes. This can be achieved by providing clear and accessible information about their AML programme and policies, and by engaging with customers and stakeholders to promote awareness and education about the risks of money laundering.

In addition to this, firms can develop their offerings by using their AML programme by reducing the burden of compliance on all parties. This can be achieved by adopting a risk-based approach that focuses on the highest-risk customers and transactions, while using automation and self-service options to make the compliance process easier and more efficient for lower-risk customers.

Evolving the AML process, taking a proactive and risk-based approach, powered by advanced analytics and technology, and focused on improving the customer experience and building trust with customers and stakeholders, will be key to ensuring that estate agents stay compliant and successful.

The bottom line 

Compliance with regulations is critical for  estate agencies to avoid costly penalties and reputational damage. The first step in compliance is understanding the regulatory process, followed by implementing appropriate software to streamline and automate the process.

By embedding excellent customer experience in the KYC/KYB processes and remaining consistent,  agencies can then focus on building trust, maintaining  and improving the customer experience.

Written by Simon Luke, UK Country Manager, First AML

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