Anti-money laundering processes are essential for every financial business; however, the way AML processes are implemented varies depending on the size of an organisation. Small or medium-sized businesses, known as SMEs, operate in a different way from that of larger enterprises.

In this blog, we’ll explore the main differences between SME and enterprise AML checks, the processes required, and the levels of software best suited for each organisation.

Searching for an all-inclusive AML solution? At SmartSearch, we have robust AML software that offers compliance and protection at all levels.

The AML requirements for businesses

All businesses, from SMEs to large corporations in the financial industry, need to comply with AML regulations. These main processes include:

• Customer due diligence checks
• Enhanced due diligence checks
• KYB and KYC checks
• Sanction Screening

There are also a number of other processes, including ongoing monitoring and ID verification as part of the AML procedures. Although all businesses must comply with these regulations, the way enterprises approach these processes differs compared to SMEs, based on their specific needs and operations.

AML for SMEs

SMEs typically have a lower volume of high-value transactions and a smaller client base compared to larger enterprises. With these smaller businesses comes a smaller number of staff and fewer people to assign to compliance, with many companies having only one AML officer in charge of AML compliance. With limited resources, SMEs need simple and cost-effective AML solutions. Automated features are particularly helpful for relieving pressure on manual checks and streamlining processes, removing the need for manual ID checks, whilst cloud-based systems collect all customer data without the need for manual paper trails.

SMEs rely on digital identity verification, but can often perform more basic PEP and sanction checks and more standard reporting processes. With a risk-based approach, only utilising extra resources when enhanced due diligence and deeper PEP investigations are required, SMEs can maintain AML compliance whilst staying within their operational means.

AML for Enterprises

Enterprises operate in a completely different and more complex way compared to SMEs. Enterprises often have customers and relationships overseas and a larger volume of customers. This requires stricter and more stringent security checks during the onboarding process. It also increases the risk of financial crime, leading to a need for greater security measures and intelligent systems.

Enterprises cannot conduct simple verification checks and require more sophisticated AML processes, including real-time monitoring, screening across multiple jurisdictions and large-scale onboarding. Unlike SMEs, enterprises need to be able to onboard thousands of customers or more every month, making advanced automation essential.

Monitoring - Continuous vs periodic

Monitoring processes between SMEs and enterprises have a clear divide. For SMEs, AML checks and due diligence are conducted during onboarding and are scheduled periodically based on a customer's determined risk level. This approach ensures smaller businesses meet regulatory requirements and ensures security, despite limited resources.

Enterprises, on the other hand, cannot rely on periodic monitoring. With a larger number of clients, including a greater number of high-risk customers, watchlist monitoring needs to be continuous. Customer risk profiles can change at any time, so automated systems are needed to flag any changes across PEP databases and global sanction lists. Continuous ongoing monitoring keeps large enterprises on top of changes and helps to mitigate risks before they become a threat.

Due Diligence for SMEs Vs Enterprises

Customer due diligence is essential for every financial business, with SMEs usually requiring more simplified checks. The majority of SME clients are individuals or other SMEs with simpler business structures. This means that risk assessments and scoring can be basic as there are fewer PEPs and high risk customers onboarded compared to enterprises. Of course SMEs still need the ability to conduct more in depth checks where required, but standardised processes don’t need to delve into enhanced due diligence unless necessary.

Enterprises on the other hand face a different set of challenges and need all encompassing due diligence processes. Software needs to be able to identify any PEPs, SIPs and analyse beneficial owners and persons of interest within a companies structure. Enhanced due diligence should also be conducted on all high risk corporate clients or PEPs automatically. The chance of encountering large corporations with complex ownership, shell companies and operations across multiple jurisdictions is much higher, so automated CDD and EDD tools are essential for mitigating risks.

For both SMEs and enterprises, manual due diligence is impractical and often ineffective. In enterprises in particular, client relationships and onboarding are too complex, meaning that reliance on automation for enterprise AML checks is crucial.

Document Verification Software

For larger-scale industries like fintech and banking, manual identity verification is impossible. Not only would manual checks be extremely lengthy, but they also increase operational costs and run the risk of human errors. Enterprise document verification software needs to be intelligent and automated, with companies investing in software like TripleCheck, which offers biometric facial scanning, global ID validation and fraud detection. Integrating these checks into one, all-inclusive software not only streamlines document verification but also ensures the onboarding process is smooth and stress-free for clients.

Choosing the right AML approach for your organisation

Deciding on the depth of AML processes and the right technology depends on your business's customer volume and industry complexity, alongside internal factors like finances and company structure.

For SMEs, balancing affordability with compliance is often the most important factor for selecting AML processes. SMEs can typically conduct more simplistic AML checks that meet regulatory requirements and save costs as they deal with fewer high-risk clients.

Enterprises operate on a much larger scale, so more advanced infrastructures are essential for effective AML processes. Enterprise watchlist monitoring, enterprise due diligence software and enterprise document verification software all need to be sophisticated, automated and all-encompassing in order to ensure a secure AML strategy to meet larger safety requirements.

AML for all businesses at SmartSearch

AML compliance is necessary for every financial institution, but the level of complexity needed varies between enterprises and SMEs. Smaller businesses like SMEs need to balance operational costs with AML compliance, whilst enterprises need larger-scale systems to handle high volumes of customers, continuous monitoring and complex clients.

Whatever level of anti-money laundering you need, we have the right software here at SmartSearch. We offer a fully digital AML solution that encompasses everything from document verification to enhanced due diligence to help your organisation stay compliant at every point.

Get in touch with SmartSearch today or request a free demo and discover how we can transform your AML processes.