Role of technology in anti-money laundering

The state of technology is constantly evolving and undoubtedly for good. For any industry to survive, modern technological suits are an integral requirement. It is simply because all the industries are now focusing on minimizing the manual efforts and incorporating automation and Artificial Intelligence (AI) into their systems. Financial industry or institutions are more prone to risks, and hence, giving space to manual steps calls for unwanted circumstances that might result in irreversible qualitative, as well as quantitative damages.

Anti-money laundering (AML) includes regulations and laws that are aimed at preventing any sort of financial crimes. Every country has a differentiated and clearly established set of AML regulations or rules. For Uganda’s case, we have Anti-Money Laundering Act, 2013, as amended and its respective regulations.

It’s a regulatory requirement for every identified reporting entity to put in place mechanisms to know its customers. Knowing your customer (KYC) is just a part of the steps undertaken by reporting entities/accountable persons for AML/CFT purposes to prevent any sort of money laundering activities. In summary, KYC is a procedure in which financial institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) gather information related to their potential customers. This information includes name, name of the business, address, age, legal identity card, nationality, among others. All business enterprises that are prone to money laundering activities should have AML compliance strategies in place. However, complying with all such methods might not be easy at first because it incorporates a lot of tedious paperwork and asks for your undivided attention to understand the gist and make all your staff aware of the same in the most effective and efficient manner. In addition, these strategies are updated at regular intervals, and this is the point where the need for and importance of technological aid come into the picture. Technological evolution supported by AI, machine learning, and big data can exponentially reduce the risk of money-laundering.

It is worth noting that reporting entities, especially FIs and DNFBPs are now replacing the good old black and white rules approach with something more focused on the technology front, holistic, and flexible programme.

The emerging technologies, especially those with AI capabilities can identify patterns of transactions, anomalies and behaviour rapidly, allowing the AML compliance professionals to invest their time better analysing the results, collaborating the findings with other financial institutions, and investigating root causes and valuable time.

The new technologies in form of new AML solutions supported by AI have enabled reporting entities to easily comply with all the AML laws and regulations along with the scope of minimising your financial risk. Here are a few solutions that will allow reporting entities to comply with all AML and KYC processes and strategies:

 Every transaction that your business encounters on a daily basis involves some sort or level of risk. Hence, transaction monitoring software is the essential requirement for reporting entities under AML obligations. Reporting entities can create their own set of rules without having any prior coding knowledge in order to detect suspicious and high-risk economic activities automatically.

AML name screening software can help reporting entities effectively meet all their basic requirements of sanctions, Politically Exposed Persons screening services, risk-based approach, and can also meet local and global AML compliance policies and keep your business safe from any negatives.

Mr Cyrus Barigye is the director of ICT systems and security at the Financial Intelligence Authority of Uganda ​