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The Cost-Benefit Analysis of Ongoing User Screening 

Based on the 40 recommendations of FATF, all countries in the world maintain anti-money laundering regimes. Countries all across the world are spending tax money to maintain a consistent barrier between money laundering and transparent financial operations. 

The question arises, is it worth it to invest public money to protect against money laundering? Is the general public receiving the value for their money? The efficiency of spending is necessary to lay out revised policies and determine the cost-benefit analysis of the ongoing user screening process

This blog will discuss the ongoing user screening as an undeniable need of AML screening. The discussion will also address the cost-benefit analysis of AML user screening as part of combatting money laundering. 

Why is there a need for money laundering in the first place?

The analysis of this question brings us to the point of analyzing what is money laundering at the core. What is the purpose of maintaining anti-money laundering? Answers from a wide range of MLROs constituted: 

  • Fighting Money-Related Crimes / Reducing Money Laundering 
  • Reducing The Fight Against Crimes
  • Freezing Criminal Assets 
  • Reducing Drug Crimes 
  • Curbing Tax Evasions 
  • Improving International Compliance 
  • Precise Handling Of Particular Risk 

The core purpose of anti-money laundering regimes remains unclear and distinct for every industry and entity. 

Cost Analysis of Ongoing User Screening for AML 

A brief analysis of the cons of maintaining ongoing user screening services for robust anti-money laundering is discussed below: 

Continuous Policy Making 

Normally the problem with ongoing user screening is the consistent revisions in internal procedures and rules of anti-money laundering. This pre-requisite for this is not only trained staff who stands as the end responsible person for AML Compliance. The amount of finance required for training staff, implementation of policies, technological advancements, and time spent on anti-money laundering policies – all make consistent monitoring a pain for MLROs and compliance reporting officers.

Technological Challenges 

Staying persistent with continuous AML monitoring requires a certain set of technological advancements to keep track of every customer being onboarded or offboarding. Relevance of alerts generated is also a key factor in determining efficient ongoing user screening AML. Comprehensive, sought from official sources, and adjustable concerning relevancy and data is difficult and costly to find. 

Increased Demand for Overseeing 

Managing AML compliance all across the globe is a challenge, especially when regulations all across the world differ. It is quite challenging for MLROs to regularly review for upcoming changes in regulations and the status of each individual. 

Consider, For Example:  a PEP who stands at level 4, but within a minute, due to this close association with a political party, his PEP status may change from 4 to PEP level 1 which is quite difficult to keep track of. 

The Benefit Analysis of Ongoing User Screening for AML 

Fraud Prevention 

In the niche of AML, two types of AML fines are imposed on marked subjects and entities. One type of fines re those that are imposed due to a lack of reporting money laundering offences. The other types of fines are those that are imposed on illicit actors (money launderers) alone for facilitating corrupt practices. 

Maintaining ongoing user screening helps with prompt risk detection. Instead of manually searching for existing risks, emerging risks, and changes in level of risk, consistent monitoring helps stay informed at every step of the compliance process 

Custom Risk Scoring 

The core benefit of AML user screening software is to keep a consistent eye on risks. While keeping a consistent eye out for risks enables prompt detection, numerous insights can help reduce the workload by automating the filtering process with custom risk scoring. 

This works by assigning a unique risk level to each region based on the corruption risks associated with that region so anytime the risk level surpasses the assigned score, your system can help detect that automatically, minimizing the need and pain of consistently overseeing the process of monitoring. 

Protection of Business Reputation 

Business reputation is heavily reliant on the conduct of its employees and the credibility of the business itself. Safeguard your reputation by opting for consistent review of ongoing and emerging risk factors. 

AML user screening tool not only helps get insight into adverse challenges to come, but it also helps make informed decisions backed by accurate risk-specific information.  Businesses can maintain a high standard of integrity and transparent processes by following strict AML protocols. 

To sum it up 

After having sufficient discussion about the pros and cons or you can assume costs and benefit analysis of ongoing user experience, one can deduce the benefit to overpower the cost of ongoing user screening. 

The need for AML screening is not for compliance alone rather many businesses are not aware of their violation of AML regulations. Imposition of certain fines in response to great scrutiny helps them find out their standing or compliance status with AML regulations.