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Anti-Money Laundering Policy (AML)


Money laundering is a process of legalizing money in which a person takes acts that obscure the source of funds in order to make their nature lawful. Anti-money laundering (AML) comprises a series of measures aimed at preventing the financial system or banks from being used for money laundering or terrorist financing. AML measures and instruments are standardized worldwide and implemented by international and national institutions, banks and commercial enterprises. Every bank and other financial institution and other business entity must comply with AML laws and regulations. To obtain a banking license, the bank must approve AML compliance and provide an AML policy. The AML Policy may be updated as needed or in response to current AML trends and practice.

Core principles of the AML Directive
Although AML policies can vary from bank to bank, the most important principles are common customer due diligence procedures (CDD) based on the “know your client” principle. The due diligence process is based on the information provided by the customer in the questionnaire. This questionnaire must be updated regularly. If the person transfers funds significantly in excess of the declared cash flow, the bank may ask additional questions to verify the purpose of that transfer. If the company changes its business profile, it must inform the bank. In addition, when the company starts working with a new company, it must inform the bank to ensure a smooth transfer process. Usually banks or other large financial institutions have a special department that challenges AML. This department is called the Legal Compliance Department.

AML and customer due diligence definitely compromise customer privacy. The purpose of the investigation, however, is based solely on the protection of the public interest and the prevention of financial crime and the support of terrorism. As a result, the lack of an investigation would seriously threaten the European Union's internal market.

Objectives of the AML Directive
The AML Directive was introduced with the ultimate goal of creating a general framework for combating money laundering, terrorism, corruption and other financial crimes. The other goal is to protect the community from legalization of money and to ensure that the organization complies with relevant laws and regulations.

The introduction of an AML policy is intended to provide a transparent and traceable cash flow that must be maintained in order to prevent terrorist financing and to control its use by suspected terrorists and criminal groups as well as their own financial resources. Full transparency and traceability of money transfers is an important and valuable mechanism for the prevention process, identification and investigation of money laundering and terrorist financing. If the bank detects a suspicious transaction, it can freeze funds until the customer provides a reason.

AML policy in action
The AML policy is a foundation for procedures and controls carried out by the Legal Compliance Department (LCD). AML procedures apply not only to banking and financial institutions that make direct transfers, but also to advisors who provide services and who are well informed about the client's activities. The European Commission has developed general guidelines on the list of transactions that identify factors and explain how suspicious transactions can be identified. There is no threshold when a transaction can be identified as suspicious. The situation must be analyzed on a case-by-case basis. Each factor on its own may look seamless, but taken together it can raise suspicions that the transaction is related to money laundering. The compliance department needs to know the customer about the type of business, usual transfer amounts, financial history and background, among other things. When transactions are inconsistent with normal business practice, this can be a relevant factor in determining that a transaction looks suspicious. For this reason, banks have recently drawn attention to new customers and have given them intensive support.

AML policy strategies
Examples of generally accepted indicators are: The customer transfers large amounts without payment details or receives large amounts without payment details. The customer presents confusing details about the transaction or knows very few details about its purpose. The customer requests an express transfer and insists on making the transfer quick, or he / she transacts in different physical locations to avoid detection. The customer arbitrarily informs about large volume transactions by using unconventional accounting methods or off-the-record books. The customer does not respond to the invitation to a face-to-face meeting; normal attempts to check the background of a new or potential customer are difficult. The customer is using the mailbox service instead of a real office, or seems to have recently established a number of new relationships with various financial institutions, etc.

http://www.confiduss.com/en/services/corporate/legal/aml-policy/
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