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Anti Money Laundering Solutions For The Business Sector – An Overview Of Laws And Penalties In 2023

In order to fight money laundering crime today, the government has imposed a range of AML screening regulations. These anti-money laundering laws require all financial institutions to be increasingly stringent with their AML processes.

AML compliance is essential for all kinds of financial institutions. 

While AML can sometimes be assumed as a one-time task, it is far from the truth. Countering money laundering requires AML tabs during digital onboarding as well as regular checks from time to time.

Global money laundering prevalence highlights the importance of AML solutions

Money laundering is one of the biggest financial crimes of today. All over the world, money is being constantly laundered from one region to another through banks and other financial institutions. Money laundering exists to liquidate black money or cash. 

Criminals acquire this money through illegal and criminal measures. These illegal acts can range from weapon trade to money acquired through human trafficking.

Money laundering is one of the biggest contributors to the flow of money internationally. The United Nations Office on Drugs and Crime (UNODC) believes that a total of 2 to 5% of the entire global GDP is laundered. 

These numbers reflect the high incidence of illegal crimes that are taking place all over the world. This makes anti-money laundering or AML compliance regulations essential for fighting human rights abuses as well as financial crime.   

An overview of the current AML screening landscape or businesses

The history of AML monitoring regulations goes back to 1970 or the introduction of the Bank Secrecy Act. The bank secrecy act or BSA is a legal regulation requiring financial institutions such as banks to initiate thorough processes pertaining to record keeping of all financial data. AML solutions, as per the BSA, covered processes pertaining to KYC, KYB, bank transaction monitoring, and AML verification processes among others.

According to the Financial Crimes Enforcement Network or FinCEN, some of the major legal AML compliance acts related to anti-money laundering and financial terrorism actions are the following:

  1. The Bank Secrecy Act
  2. Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)
  3. Intelligence Reform & Terrorism Prevention Act of 2004
  4. Anti-Money Laundering Act (AMLA) 2020

The Bank Secrecy Act

Despite being the oldest one the Bank Secrecy Act is still in place and it’s one of the primary acts guidelining regulations for AML screening.

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)

The USA Patriot Act was introduced after the World Trade Center attack incident of 9/11 in 2001. The Patriot Act was very particular about money laundering and also, countering financial terrorism. 

Officially the title of the Patriot Act is the “International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001”. 

Through this act, previous civil and financial criminal penalties were increased. 

Moreover, increased authority was also assigned to the secretary of the treasury. The patriot act also defined a strict deadline for banks to deal with AML systems and concerns.

Intelligence Reform & Terrorism Prevention Act of 2004

The 2004 Intelligence Reform And Terrorism Prevention Act also gave increased authority regarding jurisdictions to the secretary of the treasury. This act required the secretary to regulate and impose further instructions and requirements related to AML solutions. This act was essentially an amendment within the BSA.

Anti-Money Laundering Act (AMLA) 2020

The anti-money laundering Act of 2020, despite being relatively new, is one of the most prominent acts related to AML compliance. The act is primarily responsible for dealing with the new technologies that come along the way. These technologies have a high likelihood of involvement in ML or financial terrorism.

When the AML screening through the AMLA was implemented, previous rules related to AML Security were also visited. This allowed to ensure the accuracy and relevance of tasks and regulations within the AMLA.+

Penalties for breaking AML security laws

The penalties for being caught involved with money laundering processes are huge and can have a range of consequences depending upon a number of factors. Primarily, these factors include your business processes, the amount of money laundered, and also simply can vary from case to case.

Overall, not making use of AML solutions to stay in compliance with the law can lead to criminal penalties going up to USD 250,000 to USD 500,000. In extreme cases, some individuals get jail for over a year.

For civil penalties, however, smaller fines for anti-money laundering are levied. For example, fines are based on a case-to-case basis and banks have the authority to levy penalties ranging from USD 5000 to USD 1,000,000.  

AML compliance for businesses – Summing up

Money laundering is a prevalent growing problem that the government and private institutions including financial institutions are actively working to fight. At its core money laundering hints towards a core societal issue of illegal crimes. However, fighting money laundering allows to control and trace black money.

These reasons, as well as to protect the businesses dealing in international transactions, are why AML solutions need to be more stringently dealt with.  This is why today we have a range of strict anti-money laundering or AML screening laws that regulate working processes for all kinds of businesses.