The world’s foreign exchange market is one of the most traded financial markets, with an average turnover of a staggering $6.6 trillion per day.
Within that market, the Australian dollar has a significant share of traded currencies, and is increasingly susceptible to fraud, AML/CTF and compliance risks.
Today, more than ever, the demand for faster and easier transactions is constantly increasing. Advances in technology have made moving funds to different parts of the world easier than ever and have contributed to the growth in money remittance and foreign exchange service providers.
The Remittance and FX industry are exposed to a range of vulnerabilities due to the growing number of providers and worldwide accessibility to customers. At the same time, the pandemic has accelerated the move towards an online digital economy, with an increased number of people relocating and working remotely.
FX plays a vital role in the modern business world, as products or services purchased in a foreign country must be paid for in that country’s currency most of the time. But over the past 18 months the foreign exchange landscape has changed profoundly as a result of the COVID-19 crisis. Priorities have had to be shuffled as new fraud, money laundering and terrorist financing threats have emerged.
The levels of money laundering and fraud risk have significantly increased, forcing companies engaged in cross border payments to reassess their risks and adapt to ever-changing criminal identity tactics.
As a Foreign Exchange Broker, there are smart ways to protect yourself against financial crime, whilst also improving your onboarding procedures.
Knowing your customer
With drug dealers, human traffickers, financial criminals tempted to use the relative anonymity and cash-intensive format of foreign exchange services to launder money, the implementation of robust Customer Due Diligence/Know Your Customer procedures is key to detecting and preventing money laundering activities.
The true challenge in KYC is knowing your Ultimate Beneficial Owner (UBO) and where the UBO has obtained their funds, especially for large wholesale clients, which are the holy grail in the FX industry.
In this context, establishing efficient and speedy ID Verification and understanding the nature of Holding companies and their underlying Trusts is the key.
‘Knowing your Customer’ means completing all necessary checks to ensure customers are who they say they are, and effectively be able to detect identity fraud or high-risk customers such as trusts, charities or similar non-profit organizations, customers who are politically exposed persons (PEPs), subject of adverse media stories or who are on sanctions lists.
There are further threats from overseas funding and the inability to establish the proper source of funds.
But this is playing against time when the customer requirement is getting their transaction settled faster and faster. In all sectors, financial institutions are struggling to meet this increased demand while keeping pace with new technologies, even if it means sacrificing customer experience.
In this challenging context, many companies still rely on time-consuming, manual, paper-based processes, creating a growing compliance risk and slowing down their processes.
There is a huge opportunity for implementing appropriate AML software and automating compliance processes to manage AML risks and give you an edge over your competition.
illion can help
illion can help you make faster decisions without losing control over your risks. We can address the pain points in your onboarding process and reduce your time involvement from days or weeks down to hours.
While KYC requirements require collecting and analysing of large amounts of data, we can help you avoid the inefficiencies and potential human errors inherent in manual analysis of that data, with suitable solutions to manage your data analysis needs and deliver regulatory compliance on an ongoing basis.
- Automate individual identification, UBOs and corporate structures investigations
- AML/CTF done quickly and correctly
- Financials- Credit purposes
- Reducing time to decision
- Bank statements linked to open banking data
- Improving customer experience – less back and forth with customers
- Saving you money
- Allowing vendors to focus on core activities
- Reinforcing compliance with regulators
- Green ID
- Simple KYC
- PEP and sanctions
- Income and Expenditure
- illion data Hub (Digital onboarding and ongoing monitoring)
Don’t become a victim to money launderers and identity thieves. For more information about how illion can reduce your risk and improve your processes, contact Richard Atkinson in our AML team.
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