Sanction Scanner: AML Compliance Checklist for Financial Industries


2020 has considerably changed the AML industry, as it did everything globally. While regulators often update the rules, criminals invent new methods. With the development of technology, financial crimes are increasing day by day. Rising crime is a serious risk for financial institutions. Organizations that do not want to experience loss of reputation and trust in addition to financial losses should follow the AML Compliance procedures. We explained these methods and requirements on an industry basis in our article.


AML Compliance Checklist for Banks 

Perhaps the first institution that comes to mind when it comes to financial institutions is banks. Banks transfer millions of money every day. He has to check whether these transfers are money laundering or terrorist financing. According to FATF regulations, banks require an AML / CFT risk-based approach. This means that banking institutions must take some precautions. In order to minimize the risk, AML / CFT compliance must be ensured. Banks have some obligations to do in this regard. These are;

  • Know Your Customer: Banks must know who their customers are. It is very dangerous for the bank’s credibility that one of the customers finances terrorism or is wanted on the sanction lists. Banks also need to know if their customers are a politically ill person (PEP). Because PEPs are riskier than ordinary people.
  • Sanctions Screening: Banks have to pay attention that their customers are not among the persons and companies mentioned in their sanction lists. Each customer and money transfer needs to be controlled in this sense. While banks make millions of transactions every day, they cannot control this manually. Thanks to AML Sanction Screening software, you can do this automatically.
  • Transaction Monitoring: Unfortunately, getting to know customers and opening an account according to sanction lists is not enough to prevent risk. Anyone not on the sanction lists also has a risk of financial crime. Banks also have to control the transactions made to minimize the risk. Banks can do about it to put their clients on their rule sets and use AML Transaction Monitoring software that alerts them to rule violations.
  • Suspicious Activity Reports:  The bank AML control unit is obliged to prepare a suspicious activity report (SAR) and submit it to financial authorities in case of detecting possible money laundering. SAR presentation should be clear.
  • AML Training – Compliance Officer:  As per FATF recommendations, bank employees are required to receive training to recognize suspicious activity that could indicate money laundering or terrorist financing. A bank’s AML compliance officer should act following FATF recommendations to provide oversight for the AML compliance program and appoint a liaison officer for financial authorities.


AML Compliance Checklist for Crypto 

The rapid growth of the crypto industry has brought problems. The development of cryptocurrencies Think about the crypto market’s growth and that criminals may come into this industry too. Suspicious Activity Reports FATF Recommendations for Crypto Crypto virtual currencies like Bitcoin have the potential to change the financial landscape fundamentally. Virtual assets provide many conveniences. These facilities are like making payments easier, faster, and cheaper. However, due to its features such as speed, global reach, and anonymity, it risked being a financial crime tool.


The recommendations titled “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Provides” were published by FATF on 21 June 2019. In these recommendations, they briefly explained how crypto companies will comply with regulations and audit them. Virtual Asset Service Providers, like other financial institutions, should apply a risk-based approach and risk assessment in the FATF manual. FATF member countries are responsible for the implementation of these measures.

  • 5AMLD – A guide for Virtual Asset Service Providers: It has been announced that the 5th AMLD, published by the European Union in 2018, will be applied to virtual currency exchanges and custody crypto wallet providers. The European Union is fighting increasing financial crimes together with FATF. While companies that do not fulfill their obligations are punished severely, they try to prevent crime with new regulations.
  • Customer Onboarding Process Under KYC and AML Obligations: With the Customer Onboarding Process, profitable customer experiences can create. For this reason, companies need to do this quickly, easily, and smoothly. Of course, while doing this process fast, it is aimed not to create an environment for financial crimes. Crypto companies must comply with AML and KYC requirements as per European Union regulations and Financial Action Task Force recommendations.


AML Compliance Checklist for Mobile Payment Providers

With the effect of the COVID-19 pandemic, cash was almost unusable. Throughout the year, people preferred card or mobile payment while shopping. Mobile payments became a trend with the impact of the pandemic. So how open are mobile payment systems to financial crimes? Mobile payment is very convenient, and criminals are also aware of these. This situation creates many threats and security problems. AML compliance processes need to be carefully controlled to prevent risk.

  • KYC and CDD Procedures: Know Your Customer and Customer Due Diligence procedures are the main steps for AML / CFT compliance. Mobile payment providers have many customers with different profiles. Therefore, it must take risks and threats during account opening. When opening an account, authentication is performed. Then, whether the customers are risky or not is determined from the lists. These lists are sanction lists. There are thousands of sanctions and PEP lists around the world. Companies cannot manually check these lists. That’s why they need AML screening software.
  • Detection of Suspicious Transactions: Another control point of the adaptation process is transactions. Catching suspicious transactions means catching them in the act. These transactions carry a high risk of financial crime. Therefore, companies bear a significant responsibility for detecting suspicious transactions in financial transactions. To detect suspicious transactions, customers should be divided into profiles, a rule should be created for each profile, and alarms should be generated to circumvent these rules. Companies cannot run this system manually if they are not very small. With the AML Transaction Monitoring Software, customers’ large suspicious transactions can generate alarms and stop the transaction, thus minimizing companies’ risk of providing money laundering and terrorist financing.


AML Compliance Checklist for Fintech 

Financial Technology companies pose a serious risk of money laundering. Fintech firms have to take precautions in this regard.

  • Know Your Customer:  Know Your Customer procedures are to measure client risk when opening an account for financial services. KYC is a method used to reduce the risks of money laundering, terrorist financing, corruption, fraud, bribery, and other illegal financial activities. FATF recommendations and European Union Directives emphasize KYC at every opportunity.
  • Customer Due Diligence: Customer Due Diligence allows organizations to evaluate the risks of their customers. CDD briefly consists of information about the customer. One of the most significant risks for Fintech firms is that their clients finance money laundering and terrorism. In Fintech firms, Customer Due Diligence is used to be sure of customers, provide regulations, and detect unusual situations.
  • Enhanced Due Diligence: Enhanced Due Diligence is the process of collecting information about the customer, such as CDD. The difference is that EDD is only made for risky customers, not for every customer. Some customers may be riskier than others at Fintech firms, and transactions can create significant problems. EDD procedures must be applied to prevent this. Adverse Media Screening allows you to search for negative news posted about a person or business. Adverse Media is an essential part of anti-money laundering processes. Fintech firms can identify risks to individuals and companies with negative media. Millions of new news are released every day, and it becomes almost impossible for companies to manually. That’s why Fintech firms can scan using software that provides Adverse Media service.


December 2020, published on Sanction Scanner

Recent Posts