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Need for New Customer Risk Rating Models: Not All Customers Are Cre...

Being estimated at between US$800 billion to US$2 trillion every year, money laundering is a serious problem for the global economy. While regulators and financial institutions are working hard to prevent and reduce the crime, launderers are becoming increasingly sop...

Excel to AI: How Reconciliation Tools Evolve for Better

In the world of finance, reconciliation is the process of comparing two related sets of records or two accounts at the end of a specific accounting period to find out if account balances are matching in both records. Periodic reconciliation of accounts is an important accounting process and is mandated by regulators to identify accounting discrepancies before they lead to serious book-keeping issues. Timely checking of accounts will identify data issues like duplication, omission, date error and amount error. In many use cases, account reconciliation will spot signs of fraud or manipulations (unauthorized transfers, unauthorized withdrawals, etc.) early. Any discrepancies in reconciliation should be investigated and, if needed, adjustments are to be added to balance both accounts. The complexity of reconciliation varies with the type of accounts, nature of business and the volume of data to reconcile. There are different reconciliation types of varying complexities such as bank reconciliation, credit card reconciliation, positions reconciliation, custodial account reconciliation, point-of-sale (POS) reconciliation, balance sheet reconciliation, suspense account reconciliation, etc. Depending on the complexity, different businesses use different methods to reconcile accounts from paper ledgers to reconciliation software. With increasing digitalization, paper records are not seen anywhere today. Businesses of all scales are using tools such as spreadsheets, accounting software and robotic process automation (RPA) to address reconciliations of various complexities. Having proven its capabilities across industries, modern technologies such as AI and machine learning are also being used widely, especially fo...

Lessons Not Well Learned: 2020 AML Fines Cross 2019 Total

If research is to be believed, institutions across the globe have not done enough in the anti-money laundering (AML) compliance area. Data from consultancy Duff & Phelps revealed that AML fines in the first six months of 2020 reached US$706 million, compared to US$444 million in the entire 2019. The fact that the penalties were imposed on the same shortcomings as that of the previous years is more worrying than the sudden increase in fines. According to the consultancy, customer due diligence, AML management, suspicious activity monitoring and compliance monitoring and oversight are the areas where firms are going wrong repeatedly. Key Takeaways from Research A total of 16 fines totaling US$ 706 million related to money laundering in 2020 till June, compared to 45 fines totaling US$444 million in 2019. There were 2 fines totaling US$26 million related to sanctions in 2020, compared to 13 and US$3.3 billion in 2029. The number of AML fines fell 14%, and fine values 86%, between 2018 and 2019 but rose again in the first half of 2020 following two substantial fines imposed in Europe. The share of the US in the total AML fines decline to 12% in 2020 (till June), compared to 45% in 2019. It indicates that other regulators around the globe have become more active with their AML oversight. There were 115 customer due diligence cases reported since 2015, compared to 109 AML management cases, 82 suspicious activity monitoring cases and 62 compliance monitoring and oversight cases. How AML Fines Impact Financial Institutions Financial inst...

AML Amid COVID-19: Watch out for These FBI-listed Fraud Schemes

There has been a rise in the number of cybercrimes and fraud schemes across the globe ever since the proliferation of the COVID-19 pandemic. Criminals, in general, are taking advantage of people’s scare, helplessness, and the need for immediate financial assistance a...

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