On 29th October, the United Nations Office on Drugs and Crime (UNODC) marked International Money Laundering Prevention Day. It is worth reflecting on the highly relevant role of Compliance Officers in the Obliged Entities tasked with preventing money laundering, the financing of terrorism, and the financing of the proliferation of weapons of mass destruction.
Over 20 years ago, on a very busy avenue—let’s say I’m referring to the Autonomous City of Buenos Aires (or “let’s say I am talking about Madrid”, as Joaquín Sabina would say)—there was a FedEx advertisement on a post, similar to the one in photo number 1 that illustrates this article, in a blurred style.
The advertisement served its purpose of brand awareness perfectly, especially for such a prestigious global brand like FedEx.
On the billboard, beneath the FedEx logo, the tagline read:
“If you want to export, follow the arrow.”
The message was read while the vehicle was in motion, so the time available for reading depended on the speed of travel and whether or not you were behind the wheel.
As you passed in front of the sign, the phrase would echo in your mind: “FedEx… if you want to export, follow the arrow.” Not everyone understood the meaning of that phrase.
If you are one of those who has not figured it out yet, look at photo number 2 and study the logo carefully for a few seconds before moving on to photo number 3. Now, look again at the logo (photo 2), focusing your gaze between the letter “d” and the “X.”
Did you spot the arrow formed by these two letters in white?
Perceiving risks, identifying them, and mitigating them: Compliance officers in money laundering prevention
- Compliance officers in money laundering prevention are experts at identifying risks (those “arrows” that others don’t notice) in the transactional operations of their entity:
- be it a bank, a fintech,
- a PSP (Payment Service Providers),
- a VASP (Virtual Asset Service Providers),
- a life insurance or capitalisation company,
- ART, gambling, credit card processors,
- savings plans,
- or cash transport companies, among others.
Compliance Officers play a crucial role in obliged entities for money laundering prevention, as they are responsible for implementing and overseeing measures that protect businesses from illicit activities and prevent the financing of terrorism.
Their work not only ensures regulatory compliance, especially in relation to the standards of the Financial Action Task Force (FATF) and the adaptations emerging in each member country (from FATF or its regional bodies) in line with their legal and institutional structures, but it also promotes trust in business relationships. By mitigating risks related to money laundering, terrorism financing, and the proliferation of weapons of mass destruction, they contribute to safeguarding the integrity of the international financial system.
Technology to identify and mitigate risks in real time
The analogy with the street advertisement comes into play because, regardless of the “speed of travel” (as referenced earlier regarding the car and the time it takes to spot the hidden date in the logo), in terms of the “circulation of transactions for legal entities and individuals,” whether they involve thousands or millions of transactions, technology is capable of identifying transactional profiles, applying the General Risk Index (IGR) related to Dynamic Risk Matrices with weighted concepts, segmenting clients, conducting Automated Due Diligence, and more.
Technology applied to identifying, monitoring, and mitigating all risks (“arrows”) plays a predominant role for compliance departments.
The identification of risks, conceptualised in this article as “flags” or “arrows” that alert compliance officers, is crucial for detecting suspicious or unusual activities and preventing money laundering and terrorism financing. In this context, technology emerges as an indispensable ally, enabling real-time monitoring and analysis of transactional profiles, thus enhancing the response capability to potential threats.
Technological solutions that help compliance departments
Advanced KYC (Know Your Client) solutions integrating biometrics and data analytics can identify unusual patterns and generate early alerts, aiding the work of compliance officers and their analysis teams, while reinforcing their goal to fulfil the public responsibility assigned to obliged entities for money laundering prevention.
By leveraging technological tools, organisations not only streamline compliance but also foster a safer, more collaborative environment between various actors in the financial and non-financial system (designated non-financial businesses and professions).
The technology enables the integration of KYC onboarding processes, Automated Due Diligence, Alert Monitoring, Transactional Profiling, Dynamic Risk Matrices, AML checklists (OFAC, UN, PEPs, etc.), reporting to the Financial Intelligence Unit, and complementing with AI models appropriately trained to complement the expertise of human capital dedicated to alert analysis and handling.
This is why the role of compliance officers, by definition members of the board, is of utmost importance when coordinating the blend of skilled human resources and technological tools.
Contact us if you are seeking a KYC screening solution focused on money laundering prevention and fighting identity theft.
Senior Sales Manager at Worldsys, a leading company in Compliance solutions. Diego has over 20 years of experience in business development within the technology and consultancy sectors, working with international companies.
(Guest Author)
