While the struggle against illicit gains has been a constant in finance, it’s a battle that has changed over time, with evolving laws, rules and practices.
I’ve had the opportunity to work closely with high-risk businesses for years, and it’s been a journey filled with learning and growth as I’ve immersed myself in the complexities of financial regulations and compliance measures. Along this path, I’ve witnessed firsthand the challenges these businesses face as they strive to uphold ethical standards and meet legal requirements.
Today, I’ll discuss anti-money laundering (AML) compliance, particularly in high-risk B2B payments.
What Is Anti-Money Laundering?
Anti-money laundering (AML) aims to stop illegal money from entering the financial system. It’s crucial for high-risk sectors like cryptocurrency, gambling and international trade.
It encompasses a wide range of potential financial crimes—from the more traditional offenses like corruption and tax evasion to newer challenges like money laundering through digital currencies, fraudulent transactions in online gambling or illicit financing linked to cross-border trade.
AML involves verifying customers (“know your customer” or KYC), keeping detailed records, and reporting suspicious activities. Failure to comply can lead to hefty penalties; for example, Binance paid over $4.3 billion in 2023 for violating AML laws.
AML Through The Years
In 1970, the U.S. kicked off its anti-money laundering efforts with the Bank Secrecy Act. By 1989, the Global Financial Action Task Force (FATF) was formed to set international standards and later added terrorism financing to its scope.
The IMF helps 189 countries keep the global financial system stable, while the EU introduced its first anti-money laundering directive in 1990, which is updated regularly. In the U.K., the Proceeds of Crime Act 2002 (POCA) handles AML laws, and even after Brexit, the U.K. still follows FATF guidelines and EU regulations.
Source
Read the complete article – written by Lissele Pratt, Co-founder of Capitalixe, as a thought leader on Forbes Business Council – published on Forbes.com.
