The prevention of money laundering and the fight against terrorist financing is a central regulatory requirement and a major challenge not only for banks and financial service providers: since the 5th EU Money Laundering Directive, the circle of obligated parties has grown larger and now also includes adjacent service providers such as providers of crypto currencies or even rental brokers. Further changes to combat money laundering and terrorist financing in the EU include increased transparency requirements with regard to beneficial owners and enhanced due diligence obligations for transactions involving high-risk third countries. Failure to comply with these requirements may result in fines of up to 10% of a company's total turnover. The fact that companies therefore need effective processes and structures to combat money laundering and terrorist financing cannot be denied in view of the legislator's requirements - but what exactly must be taken into account?
Which obligations in the prevention of money laundering and the fight against the financing of terrorism are to be given particular attention
The obligations in the area of preventing money laundering and combating the financing of terrorism arise from numerous legal texts such as the Money Laundering Act (AMLA), the German Banking Act (KWG), the Insurance Supervision Act (ISA) and the Payment Services Supervision Act (PSA). The central aim of the legal acts is to create transparency in business relationships and financial transactions and to professionally install security measures to avoid risks as far as possible. Thus, a risk-based approach moves to the centre of money laundering prevention.
In line with the risk-based approach, obligated parties must, among other things, have effective money laundering-specific risk management in place, which includes, for example, risk analysis and internal security measures. In particular, the type and scope of business activities as well as compliance with customer due diligence obligations must be taken into account in the design of the risk-based approach.
The risk analysis serves to identify and assess business-specific risks in the area of money laundering and the financing of terrorism. Liable parties must document the risk analysis, review it regularly and update it if necessary. In addition, the current version of the risk analysis must be made available to the supervisory authority on request.
The tasks of the internal security measures are primarily to control and reduce the risks relevant to money laundering and the financing of terrorism. In addition to drawing up internal principles, (Group-wide) procedures, controls and the appointment of a money laundering officer, including deputies, it is necessary to introduce and further develop suitable measures to prevent the misuse of new products and technologies. Additional requirements for internal security measures include training and reliability checks on employees.
Which levers are important for the prevention of money laundering
Our experience has shown that there are five relevant starting points for the prevention of money laundering. On the one hand, the reliability and know-how of employees plays an important role. Regular training is an important success factor here. Product design also offers relevant starting points: New product approvals in particular must be thoroughly assessed for their susceptibility to money laundering and, if necessary, sales restrictions must be imposed. The customers are another lever. Both the review and, if necessary, adjustment of the KYC process and a regular and event-related review of existing customers can greatly reduce money laundering-specific risks. Furthermore, special attention must be paid to the monitoring, filtering and validation of transactions and the examination of suspicious cases: the principle "a lot helps a lot" comes into play here. But does intensive customer and transaction monitoring necessarily have to be accompanied by an explosion in the associated effort? We know from experience: This can be avoided. Because especially in this area, the use of new technologies can lead to significant increases in efficiency and effectiveness. This not only helps you to keep the effort for routine checks under control, but also creates scope for intensive examination of really important suspect cases.
How you can increase efficiency in your regulatory management
Conversely, financial service providers are still often faced with the problem of managing high manual processing efforts in conjunction with numerous, inflexible legacy systems, redundant structures and complex, dynamic regulations. Lean management and the use of new innovative technologies can help to eliminate these problems and open up new opportunities for effective and efficient regulatory management. In doing so, classic lean management pursues the goal of creating value without waste. Customer orientation, highly efficient processes and the desired perfection are in the foreground. The use of the latest technologies to support the Regulatory Management function (RegTech) leads to a relief of the regulatory processes, an increase in efficiency and a higher effectiveness. For more detailed information, please take a look at our e-booklet on this topic.
How we support you in the prevention of money laundering and the fight against terrorist financing
Our expertise and many years of experience enable us to offer you targeted services within the scope of anti-money laundering projects. Starting with customer onboarding and the KYC process, through the monitoring of transactions to the management of suspicious cases, we enable you to master your need for change in a way that is effective. This also includes setting up and managing overarching initiatives such as awareness training for employees and managers. What we never lose sight of? The focus on maximum effectiveness and efficiency of processes and structures.
