Anti Money Laundering (AML) Solutions

Money laundering is the flow of cash or other valuables derived from, or intended to facilitate, the commission of a criminal offence. Through money laundering, criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities, thereby avoiding prosecution, conviction, and confiscation of the criminal funds. The term money laundering is also used for funds of legitimate origin, when these funds are used for financing criminal activities. Banks implement AML systems to fight against money laundering and financing criminal activities.

Business Challenges That You Face

These are some of the challenges that necessitate AML solutions for every financial institution:

• There are no effective methods that prevent criminals from using the banking system for money laundering activities.
• Banks are not well acquainted with customers and their financial dealings. Knowing customers better could help the bank manage risks prudently.
• There are no appropriate controls in place for detection and reporting of suspicious activities in accordance with applicable laws.
• International regulatory guidelines are getting tougher to comply with.
• Staff members, who interact with customers and fund movements, are not adequately trained in detecting and reporting AML activities.

What We Offer You

In general, banks adhere to these procedures when implementing AML systems:

Implementation of AML Systems

When implementing AML systems, banks generally formulate written policies so as to document the processes to be followed in preventing, detecting, and reporting suspicious activity.

AML and Risk Assessment

Banks ascertain the appropriate level of diligence required while handling certain customers and transactions that seem suspicious and may potentially pose a risk of conducting illegal activities at or through the banks.

Know Your Customer

Know Your Customer (KYC) urges banks to get to know their customers and their financial dealings better, so that can prudently ascertain and manage the risks of money laundering and financing of terrorism. KYC also enables banks to serve their customers better and win their loyalty.

KYC - Your Assured Benefits

• You are assured of having enough information on the nature of employment or business that each of your customer does or expects to undertake. This also ensures that there is transparency about the purpose of each account.
• Establish identity of the client.

For Individuals

For individuals, this means identifying the customer and verifying his or her identity by using reliable, independent source documents, data or information. This could include address, location, and photograph of the customer. This is practicable for both joint holders and mandate holders.

For Non-Individuals

For non-individuals, banks can obtain identification data to verify any or all of these:

• Legal status of the legal person or entity
• Identity of the authorized signatories
• Identity of the beneficial owners and controllers of the account

Kumaran's Role in AML at CIBC

Under AML regulations, financial institutions are legally required to obtain certain information from clients whenever a loan product or service is sold or the current relationship changes. Changes are made in one application for small and medium enterprise (SME) customers to support these regulations.

These changes will enable the SME application to ensure that AML regulatory information has been captured in Customer Information File (CIF) for applicable parties on applicable credits.

AML compliance in CIF is being driven through SME application, because current legislations only require AML information on new credits or changes to the client relationship which. This includes an increase in new funds, that is, proposed amount exceeds current authorized amount.

Existing Functionality

The system checks that AML regulatory information has been entered in CIF at initiate and submit, so that all personal borrowers and third-party beneficiaries on credit applications. At no point in the credit process is the user stopped from proceeding if AML information is not in CIF.

CIBC wanted additional fields to be recorded in CIF to meet AML compliance such as name, address, and date of birth.

Proposed Functionality

The system checks to ensure that AML regulatory information has been entered in CIF or SME application prior to allowing the user to submit a new credit application or a credit application, where there is an increase in new funds. The system will prevent the user from submitting the credit application if the information is not in CIF or SME application. The user will not be able to submit the credit application until all borrowers, third-party beneficiaries, and key officer AML information is validated in CIF. The user will be prompted with warning messages directing them back to the appropriate screens until the AML requirements have been satisfied.

The above AML procedures were successfully delivered to the Bank and it is now operational.