Роман Терещенко, бізнес-аналітик

Roman Tereshchenko: KYC and AML – preventing fraud, money laundering and illegal financial transactions

In the finance sector, KYC (Know Your Customer) and AML (Anti-Money Laundering) are integral elements of security and compliance. These practices play a key role in ensuring the integrity of the financial system and protecting financial institutions and their customers from potential fraudulent activities. In this article, fintech expert Roman Tereshchenko will present an analysis of current trends in the use of KYC and AML to combat fraud, money laundering and other forms of illegal activity.

Security and legality: the role of AML and KYC in preventing financial crimes

AML and KYC rules have become an integral part of the operational activities of financial institutions in the fight against illegal transactions. Formulated to control money laundering, fraud, and other forms of financial crime, these rules, according to Roman Tereshchenko, have become strategically important.

Referring to data UN an expert notes that money laundering accounts for 2 to 5% of global GDP. In monetary terms, this is $800 billion – $2 trillion. Given this high rate, the implementation of reliable AML and KYC procedures becomes extremely important for banks and fintech companies. These rules help build customer confidence in institutions that maintain high standards of security and transparency.

Roman Tereshchenko about AML as a key tool for combating financial fraud

Comprehensive AML measures are used to combat money laundering and their protection from criminal activities, against the financing of terrorism and other illegal transactions. These regulatory standards are developed and periodically updated by The Financial Action Task Force, taking into account technological changes and current trends in the financial industry.

“To prevent money laundering, AML procedures are applied,” explains Roman Tereshchenko. – KYC is one of the important components of AML. This verification process involves a detailed analysis of client information before providing financial services to him.

The authenticity of the client’s identity, the reliability of the documents provided and sources of income, as well as the assessment of the potential risks of cooperation – all these aspects, as the expert reports, are analyzed during the KYC procedure.

“Strict compliance with AML standards allows fintech companies and other financial institutions to successfully avoid participation in illegal activities and processes,” Roman Tereshchenko is convinced.

Modern Security Measures: Key Procedures

In the financial services industry, AML, counter-terrorist financing (CTF) and KYC procedures are becoming increasingly important. They, according to Roman Tereshchenko, provide for the following activities:

  • Identity verification. For new clients of fintech companies, it is mandatory to undergo verification based on official documents confirming their identity. This stage involves checking the authenticity of the documents provided and their compliance with the client. In the modern financial world, such a process, as a rule, is already automated using artificial intelligence technologies.
  • Screening and continuous monitoring of clients. The expert is convinced: to avoid risks, clients of financial institutions need to be checked for political affiliation and the absence of their names on sanctions lists.

– AML and KYC checks should be continuous throughout all customer interactions. It is important to monitor changes in their data and identify suspicious transactions, emphasizes Roman Tereshchenko.

Based on the above, the fintech specialist names the mandatory AML and TF procedures that must be followed:

  1. Suspicious Activity and Transaction Reporting: A process must be followed to promptly report suspicious transactions and respond accordingly. This is an important step in the fight against financial crime.
  2. Training and Policies: Regular training and policies are maintained to ensure that employees are as aware of AML rules as possible. This process plays an essential role in effectively countering fraud.
  3. Maintaining internal records and audit trail. Roman Tereshchenko emphasizes the importance of maintaining sufficient internal records and an audit trail. This is necessary for the proper storage of AML and KYC data.

According to the expert, trends in the field of KYC and AML are moving in the right direction, but there are still a number of problems that financial institutions face. The fact is that the regulatory environment in this area remains complex and is constantly being improved, and this requires significant resources to comply with it. Therefore, staying ahead of global trends and solving problems in the field of KYC and AML is a constant challenge for modern fintech companies. But Roman Tereshchenko is confident that those of them who are committed to fighting fraud, money laundering, and other illegal procedures will win. Even though they invest quite a lot in protection from financial criminals, they gain the trust of clients who are also against “dirty money” and in favor of money laundering.