Being compliant is paramount for companies across the globe. Not only does it ensure you’re avoiding penalties, but it also helps to maintain your organisation’s good name—confirming that you’re a trustworthy partner to do business with.
But with financial fraud on the rise—now estimated at £34.2 billion per annum after a 19% increase—there’s an immediate need for more businesses to start taking compliance even more seriously this year. Let’s explore this further.
What impacts does money laundering have?
Money laundering is one of the most common financial crimes, impacting the economy on a global scale. And with estimates placing the value of money laundered globally at around 2-5% of global GDP, it’s clear that criminals and fraudsters across the world are often succeeding in exploiting individuals and businesses to commit financial crime.
Money laundering and associated financial corruption can have many significant impacts, including:
- Diminishing faith in democratic structures
- Less funding available for the government’s economic policy
- Damage moral and social aspects of society
- Greater exposure and motivation for other criminal activities, e.g., drug and human trafficking, smuggling, and corruption
With such damaging prospects amounting from the completion of money laundering, it’s little wonder why regulation and legislation around tackling it is so strict—and constantly evolving as the economy and society does.
The price of non-compliance can be detrimental to a business’ financial health and reputation, so anti-money laundering (AML) procedures are aimed at not only shielding society from these crimes, but also helping organisations to protect themselves. One way this is monitored and regulated is through accurate and reliable KYC processes.
With all this in mind, let’s delve deeper into the top reasons you should be investing in compliance this year.
1. It improves customer trust
It’s no secret that customers have become choosier about which companies they’re spending their money with. Not only that but ensuring that their money is going to be handled correctly and that organisations’ ethics match up with their own.
Take the greater move towards GDPR and the new FCA Consumer Duty plans into the mix, and there are clear and valid reasons for why customers are mentally creating strict criteria that organisations have to meet, before they will even consider working with them.
When you invest in compliance and compliance ecosystems, you will be closer to meeting customer expectations and gaining their trust as they will value the intent behind your AML and KYC compliance policies, and the efficiency of these. In turn, this can help you to unlock routes to the best possible long-term profitability, business continuity, regulatory compliance and customer intelligence.
2. It encourages social stability
Mature economies that are generally viewed as quite solid, like the UK, are an incredibly attractive option for those wanting to scale up and bring large funds from this scaling process from overseas and internally. But, in order for the social standing of these economies to remain solid and stable, the funds entering and leaving need to be clean and legitimate.
Compliance processes are one way of regulating the movement of money, and ensuring it is from legitimate sources. When you choose to implement these in your business, you not only protect your own livelihood from being manipulated by fraudsters, but also the wider economy and the livelihoods of others. This helps to strengthen the overall stability of our society, so keeping AML compliance at the top of your priority list will be of big benefit to you.
3. It helps fight other types of crime
Successful money laundering empowers and celebrates the proceeds of crime, and further encourages other corrupt and illegal activities to take place. For example, the money gained from money laundering can help drug gangs and human trafficking rings to expand and benefit even further from the rewards of their crimes. This has a cyclic effect, bringing in more money to launder, and to reinvest in these crimes.
When you take the time to strengthen your AML processes and policies, you help to nurture a healthier and more ethical economical space, while simultaneously building a reputation for yourself that customers and other businesses alike will want to partner with.
4. It’s simpler than ever before to comply
Opportunities for fraudsters to find loopholes have evolved as our way of doing things have become deeply digitised. As a result of this, we’re seeing regulators react proactively and implement new measures on a continuous basis, therefore keeping up without assistance can be tricky.
However, due to the pressure from regulators for businesses to be on top form with their compliance processes, we’re seeing increasing market demand for intelligent, flexible, and simple AML and anti-fraud solutions, as well as robust electronic identity verification solutions. These not only minimise the risk of human error and give your employees time to progress with high value-add tasks, but they can also significantly speed up the onboarding process, and notably from remote locations, helping to keep customers happy and engaged.
With threats developing quicker than ever, developing and maintaining a robust compliance process should be at the top of your agenda.
Not sure where to start? We can help. Get in touch with our technology experts to find out how our automated compliance solutions can help keep you on the right side of the regulators and your customers this year.
