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What is AML?

The term ‘anti-money laundering’ refers to the set of laws, regulations, and procedures in place to prevent money laundering. 

Money laundering is the process criminals use to disguise illegally obtained funds as a legitimate income, which involves “washing” the proceeds of financial crime. This is done by integrating the “dirty” money into the financial system, so it looks like it was earned legitimately.

There are three distinct stages of the money laundering process – placement, layering and integration. You can find a more detailed breakdown of these steps over on our dedicated money laundering page.

What are AML checks?

Anti-money laundering checks[JS1]  are a key component of the global anti-money laundering effort, and typically involve ID verification, as well as the screening of potential clients and customers to determine the level of risk they might pose to your business.

In line with EU money laundering directives, every business in the regulated sector is legally obliged to adopt a risk-based approach, which entails checking new clients and customers against international sanctions listsPEP lists and SIP lists. These checks enable you to identify any high-risk customers, and perform enhanced due diligence (or EDD) wherever necessary.

Enhanced due diligence is a more in-depth process of investigation, and generally includes adverse media checks, which will shed light on the reputation of the individual or business within the industry, and could reveal historic indiscretions. If you’re considering a deal with a high-risk customer, you should also continuously monitor sanctions and PEP lists as part of your enhanced due diligence, to ensure you’re aware of any changes in their status.

Simply put – AML checks and EDD allow you to make an informed decision when going into business with a new individual or business, with clear visibility of any risk they pose to your firm.

What’s the difference between AML & KYC?

AML and KYC are often used as interchangeable terms, but they don’t have the same definition. AML, which stands for anti-money laundering, usually refers to the regulations, laws and measures in place to try and deter criminals by making it harder for them to disguise the proceeds of financial crime.

Meanwhile, KYC – which stands for know your customer – is a series of checks that must be carried out as part of your risk-based approach to AML compliance. KYC and KYB (know your business) checks are often the first stage when onboarding a new potential client or customer, and they essentially verify the identity of an individual or business.

SmartSearch Can Help

AML is a complex, ever-evolving process, and your compliance measures must always reflect the most recent regulations – which can be imposed at a national or international level.  

As well as this, AML checks themselves are time-consuming and expensive to carry out manually, and often require the presence of physical documents from each customer or client.

SmartSearch is an end-to-end electronic AML platform, which encompasses every stage of the process, from initial checks and KYC, right through to sanctions screening and ongoing monitoring. What’s more, our industry-leading platform is completely automated, making manual checks a thing of the past – and with access to global databases like the Dow Jones Watchlist, you can count on our service to be as accurate as it is fast.