Anti Money Laundering (AML) Compliance
AML Rules is built in centrally managed set of pre-defined rules that are ensuring all transactions recorded with CurrencyXhanger are completely in compliance with international and local Anti Money Laundering requirements. Most of the built in features of this submodule are required by law, and some are added based on Branch or Local Authority recommendation for additional security reasons.
All active rules defined in CurrencyXchanger are listed in Configuration>AML Rules. You may be able to see all the rules here, but you will not be able to edit or alter these settings in any way. These rules consist of sets of requirements about origin of funds and purpose of transactions for Large Cash Transactions (LCT). By matching this information against international and local sanction lists, the software is checking in the background if any transaction reached certain amount and if any customer profile matches a person or an entity in any of those lists and prompts a warning. Every MSB (Money Service Business) is required to report any matches against these lists or any suspicious activity in movement of funds to local authorities according to local laws.
Mandatory Rules (because of accordance to compliance regulations)
- By KYC AML PEP rule, all registers customers are being matched against lists of Politically Exposed Persons (PEP). If the match exists, by local law such customers must be reported
- By KYC AML Standard, for all transactions larger than 5,000 CHF, Customer is required to present at least one valid document and personal information. Customer is matched against the sanctions list and presented with a printout of AML form they are required to sign. If the match exists, by local law such customers must be reported.
- By KYC AML Large Cash rule, all customers making transactions larger than 100,000 CHF are required to explain origin of funds, purpose of transaction and provide beneficiary details in addition to KYC AML Standard requirements. Customer is matched against the sanctions list and presented with a printout of AML form they are required to sign. If the match exists, by local law such customers must be reported
KYC AML Manual Due Diligence, allows tellers to enter additional info and screen the data of any customer that seams suspicious for any reason and regardless of the transaction amount they intend to make.
CurrencyChanger also has a set of built in rules that are not directly related to AML Complience, but are defined in this module such as Reservation and Upsell Euro rules.
- Reservation rule requires Customer personal infrmation and at least two means of contact and prompts a warning to fill them out, which we already had a chance to mention in reservation chapter.
- Up-sell Euro rule displays an offer for better rate in a form of warning for customers making transaction between 1800-1999 EUR if they round up to 2000.
How does it actually work?
There are two criteria that are used to define a rule - the amount threshold and match against sanctions list. Amount threshold rules are defined by KYC AML Standard and KYC AML Large Cash rule, and sanctions list rules are defined by KYC AML PEP rule and KYC AML Manual Due Diligence.
When do the rules apply?
- every time you are starting a new transaction in Invoice Wizard, the single position amount (validated line) and the Grand Total are being matched against centrally managed AML thresholds. If the amount exceeds one of the defined thresholds you will be prompted with a Warning to enter Customer details.
- Every time you fill out customer's name, second criteria starts to apply and they will be matched against sanctions lists in the background. If a match exists a new Warning will be displayed and you will be able to asses whether the person on the list is a true or false match to your customer and select that option.
We explain this in detail in the next article of this chapter called Compliance Warnings.
How do the rules apply and what actions can you take?
Each rule you select in the AML module is defined by Criteria, Actions and Record-keeping requirements.
1. We can see criteria for matching each rule and the add exceptions to ignore the application of the rule for certain group.
2. In Actions:
- "Must be Reported" stands checked for preetty much all rules like hitting threshold etc, it for that means the transaction will automatically be listed in Explorer->Invoice Audit for further review.
- If "Prevent Transaction" action is defined for certain rule, it means that completing the transaction is prevented and a red “BLOCKED” banner will be displayed over the invoice. You will not be able to proceed to closing positions of that transaction.
- If the "Display Warning" is defined for a rule, a popup warning box with a pre-drfined warning text will come up if the rule was met while completing a transaction or a customer's profile.
- If the "Print form" action is checked, additional AML compliance form is printed, for example when hitting theshold or PEP list match
3. And finally, Record-keeping requirements define the necessary completion level of the customer profile, where we set required and recommended levels. Required levels are always framed in red on Customer Profile module when the rule is met, and the recommended ones are in blue. We explain this in detail in the next article of this chapter Compliance Warnings.