Leveraging biometric screening in the fight against money laundering (ML) and the financing of terrorism (FT), the Central Bank of Nigeria instituted the BVN (Bank Verification Number) to streamline banking customer identification systems.
To maintain an intricate balance between the exclusion of financial services to 90% of the population in developing countries and increasing financial exploitation in developed countries, advanced (AML/CFT) anti-money laundering and combating the financing of terrorism measures are inevitable.
Biometric identification of clients or business partners to manage anti-money laundering risks can help maintain effective compliance measures as it reduces the chances of false alerts in AML screening.
In this blog, we will discover why and how AML checks embedded with biometric technology are transforming the strategies to put a hold on financial systems exploitation.
4 Reasons Why Biometric Checks Refine AML Compliance
The efficiency of AML measures relies on the effectiveness of your customer identification and improved screening against corrupt actors. Let’s explore reasons biometric AML can be a game changer in AML/KYC solutions.
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Precision in Customer Identification
AML screening by using names has already been in practice to meet compliance goals. However, AML checks supplemented with facial recognition technology have enabled institutions to save screening time and spot identity frauds in anti-money laundering measures.
Biometric identification in AML has significantly reduced occurrences of false positives and unlike manual or traditional verification processes, the technology has offered compliance a more reliable and accurate method to filter out financial offenders.
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Standardized Customer Due Diligence
To achieve AML compliance and sanctions list screening objectives, the FATF (Financial Action Task Force) encourages institutions to conduct optimal customer due diligence (CDD) and verify who their customers are. By leveraging the face-matching tools, compliance officers can ensure standardized due diligence with minimal to no false matching.
When it comes to AML checks and monitoring in regions with high vulnerability to exploit financial systems and dodge the verification processes, when screened using a unique facial recognition system, can be resisted.
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Aligned Compliance Processes
The evolving regulatory demands and increasing money laundering activities require businesses to optimize their compliance processes while not burdening their budgets. Integrating biometric technology into AML ensures efficient screening with effective time and resource management.
This also enables them to focus on AML risks with more time and resources required. Supplemented by biometric systems, AML measures can be improved with less to no misidentification of entities and align with dynamic compliance needs.
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Improved AML/CFT Controls
Deficiency in anti-money laundering (AML) and combating the financing of terrorism (CFT) controls can lead businesses to non-compliance and hence the aftermath of it. Increased AML fines and compromised reputation are some of the major reasons you are required to improve the in-house compliance system.
When identified with biometric screening, financial fraudsters can be stopped from penetrating into the legal financial fiber and cleaning their dirty money. Additionally, the implementation of upgraded technology into a business security system allows your customers to trust in the institute’s services.
Having the necessity of biometric technology integration into compliance explained, it’s equally crucial to understand the evolution of the technology and which setup would work best for you.
3 Major Advancements in Biometric Screening Technology
The evolution of technology such as AI (artificial intelligence) and ML (machine learning) has accelerated the efficiency of biometric checks in empowering AML controls. Let’s take a sneak peek into three major advancements in the field that can elevate your compliance efforts.
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Fingerprint Sensors
One might have heard about sensor technology as it is being extensively used in consumer electronics such as smartphones and other electronic devices that require identity verification and protect your data and identity. Leveraging the ultrasonic technology in these sensors, compliance officers can accurately identify customers.
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Iris Scanning Technology
With a blend of sophisticated and advanced algorithms and imaging technology, iris scanning creates detailed patterns of images in the iris. These images captured by high-resolution cameras are then converted into digital footprints and matched with the pool of data by leveraging AI and ML technologies. The precision in identity verification allows compliance officers to ensure efficient AML risk management.
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Artificial Intelligence & Machine Learning
The efficiency of biometric screening has been elevated significantly by integrating AI and ML into AML screening tools. The digital data collected through various tools is processed through AI which continuously improves itself based on the data and patterns. Self-learning algorithms empower ongoing AML screening and aid in meeting ever-evolving compliance expectations.
Let’s Wrap it Up!
It is evident that regulatory expectations to meet AML compliance needs will not change however, what can change is how you protect your business from financial fraudsters to exploit the security and compliance measures.
Embedded with advanced algorithms, biometric screening tools offer a promising future of AML controls allowing institutions to fight against financial crimes and ensure compliance. In addition to integrating technology, compliance partnership strengthens anti-money laundering efforts.
