Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance have drastically changed the way the world conducts business, for the better. KYC is the process of fully verifying the identity of your clients and with this you are able to secure your business dealings by trading only with legally registered entities. Consequently, compliance with AML is essential in order to prohibit the practice of generating income via illegal methods. Action is generally taken by contracting experts to conduct meticulous due diligence investigations when institutions issue credit or open accounts for customers. This ensures that you know your customer and, consequently, mitigates the risks of on-boarding clientele that may be laundering money or already sanctioned.
The consequences of not conforming and complying with KYC and AML procedures can be detrimental on a business. The policies are rightly taken very seriously, thus, compliance is a necessity. There have been a multitude of cases where businesses have failed to comply and they have suffered the consequences. Over the last 10 years there have been fines of over $25 billion for non-compliance with AML and KYC regulations.
The US is held accountable for an estimate of 44% of all AML/KYC fines, however their fines total a staggering 91% of the global fines issued indicating extremely strict enforcement. Currently, the Middle East has the fewest financial reinforcements of all regions but is by no means unaffected or unregulated. Institutions that require compliance with the regulations, such as banks and financial companies, have suffered many such punishments over the last decade, and the very magnitude of fines should spur a warning to all compliance officers.
One case that proved to have hefty consequences when failing to comply with AML was the U.A.E-based bank, Mashreqbank PSC, New York Branch. The bank was fined $40 million by the New York Department of Financial Services for AML breaches. Further repercussions of this incident included, under a consent order, having to hire a third-party compliance consultant to oversee deficiencies in regards to compliance. The bank was also subjected to further scrutiny of past actions.
Another case, on a smaller scale, relates to the former CEO of Sonali Bank (UK). This was conducted by the Financial Conduct Authority (FCA), who fined the individual £76,400. The case was reviewed from 2014 to 2016 and concluded that the CEO failed to take reasonable steps to mitigate the AML risks from a culture of non-compliance, in addition to a failure of oversight on the procedures.
Do your Due Diligence – The Cedar Rose Solution
The crack down on AML and KYC regulations has proved to be a robust system, with financial regulators stopping at nothing to ensure companies are participating in the right course of action to prevent illicit activities. Before you go into business with someone, make sure you do your due diligence, investigate your clientele in line with KYC and AML regulations, otherwise it may be your business next. Our investigative due diligence reports provide meticulously gathered and professionally detailed information on companies or individuals. From Enhanced due diligence reports to Customer due diligence investigations, Cedar Rose offers the helping hand you may need to comply with KYC and AML regulations.
We are experienced in the Middle East and North Africa (MENA) region for over 21 years and now cover several developing countries where information has traditionally been hard to access. We are the go-to company for the Middle East (including Iran, Cyprus and Turkey), North Africa and India and are chosen due to our expertise, professionalism and trusted quality. Don’t take the chance of not conducting the correct measures for compliance, the effects may be irreversible – not only financially but to your reputation too.
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Written By Jack Evangelides, Marketing Assistant
*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***