Financial institutions have become more vulnerable to illicit criminal activities that include, but are not limited to, money laundering, terrorism financing, fraud, bribery, and corruption in an increasingly global economy.With that in mind, it has become necessary to fully understand who your customers are, be they individuals or corporate entities. This process is called "Know Your Customer" (KYC). Afriex takes KYC with the seriousness it deserves in accordance with the regulatory requirements, as well as curbing identity theft and account takeovers.
KYC involves the following steps;
1. Establishing the customer's identity: The information collected here includes, but is not limited to, the official full name, date of birth, citizenship, and jurisdiction of operation.
2. Understanding the customer's activities to evidence the source of funds: The information collected here includes the user's profession.
3. Understanding the customer purpose of funds
KYC Documents Acceptable at Afriex
What is Anti-Money Laundering (AML) Screening
In the financial sector, screening refers to the process of carrying out extra due diligence checks to confirm that your customer is not associated with financial crimes such as money laundering, terrorism financing, or adverse media mentions that are predicate offences to money laundering.
Screening is only possible once you have enough KYC documents submitted. The data is run through a database with lists from OFAC, the UN, the EU, the UK, and even specific country lists to ensure that no bad actors are attempting to onboard on the platform.
Why is AML screening important?
In order to maintain the integrity of a financial institution, and protect it from abuse by criminal activities, screening should be incorporated as a critical component of the institution. Additionally, screening helps in;
1. Compliance with regulations: All financial institutions are obligated by law to have strong AML programs in place to comply with the various anti-money laundering regulations and requirements in all their jurisdictions of operations. Failure to comply with these requirements could result in legal action being taken against the organization and financial losses, including fines, loss of license, and reputational damage.
2. Financial Crime Prevention: As earlier mentioned on the importance of KYC, screening aids in the prevention of financial crimes such as money laundering, terrorism financing, and other illicit activities. Financial institutions help disrupt criminal networks by identifying and reporting all suspicious activities to regulators for further action.
3. Protecting customers and stakeholders: screening protects existing and potential customers and stakeholders by reducing financial crime risk. As mentioned earlier, non-compliance could result in heavy fines and penalties against the organization, which could even lead to the liquidation of the organization. As a result, the liquidation may affect innocent customers.
4. Protection of the organization's reputation: Any financial institutions suspected of or associated with money laundering, terrorism financing, and all other illicit activities can suffer serious reputational damage. Consequently, business opportunities are lost, the confidence levels of investors drop, and the cost of attracting and retaining existing customers goes up significantly. The financial institution could even shut down in severe cases.