AML challenge to combat criminal use of third-party payment platforms

BankersAccuity highlights the importance to extend anti-money laundering (AML) rules beyond cash transactions


BankersAccuity, the global standard for payment efficiency and compliance solutions, addressed Chinese 3rd party companies during the “China Third-Party Payment Anti-Money Laundering” seminar co-hosted with China Centre of Anti-Money Laundering Studies (CCAMLS) in Shanghai. Representatives from People’s Bank of China and Chinese Ministry of Public Security and Industry joined the discussion about the emerging trends of Chinese online payments and how the third-party payment providers can mitigate risks from money laundering.

Criminals are turning to alternate channels of money laundering and terrorist financing to avoid recordkeeping and reporting requirements due to the tightening enforcement of Anti-Money Laundering regulations on financial institutions. Due to their anonymity, online payments and virtual currency are commonly misused for laundering illicit proceeds.

Yet, money laundering is not restricted to transactions of money alone. Seemingly harmless and low risk transactions of physical goods through online exchange platforms, like fertilisers or pearl necklaces, can be exploited if the transactions are not properly regulated. This could lead to unintentional support of terrorists or criminal activities in sanctioned countries.

“With increasing tightening of North Korea’s financial system, we’re now seeing efforts by international regulators to cut off imports of luxury items into the country. A pearl necklace could be jewellery or it could be traded for cash when the flow of money is heavily restricted through international regulations. While a briefcase full of North Korean Won would be hard to hide, expensive jewellery can simply be worn. It’s a textbook example of money laundering. As for fertiliser, reports from various sources have pointed to Calcium Ammonium Nitrate used as homemade roadside bombs in Afghanistan, which resulted in recent efforts by Pakistan to reinforce its border against fertilizer smuggling. Thus, fertiliser can be weapons of terror, jewellery can support dictatorial regimes, and seemingly harmless transactions can have devastating consequences”, said David Pan, BankersAccuity’s Product Manager of Risk Compliance APAC.

It’s not just the terrorist organisations that gain financial benefits from money laundering. “Recent history has shown that regulators focus diligently on the need to combat money laundering that supports terrorist financing. However, drug trafficking, child pornography, identify theft and other activities that also benefit from money laundering, often do not receive the same attention. As the Liberty Reserve case shows, the potential for doing business with individuals engaged in these crimes remains. In order to remain protected and avoid potential enforcement actions, organisations must place equal weighting on all industries that benefit from money laundering as part of their compliance screening programs”, said Micah Willbrand, Director of Risk & Payments EMEA, BankersAccuity.

Detecting such transactions can be challenging with inadequate customer identification data, reliable data and watch-list sources, and efficient AML control solutions. BankersAccuity has been providing AML solutions and comprehensive screening data to over 20,000 financial institutions, government agencies and organisations globally to help streamline their payment and account screening process.

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About BankersAccuity

Owned by one of the world’s leading business to business publishers, Reed Business Information and part of Reed Elsevier, BankersAccuity sets the global standard forpayment efficiency and compliance solutions. It includes Bankers’ Almanac and Accuity, premier data services that have been providing solutions to banks and businesses worldwide for over 175 years.

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