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Remittance Services – tackling another vulnerability

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Digital services spread rapidly once their potential is understood. Witness the swift adoption of mobile phones in regions where traditional infrastructures were absent. This digital leap has transformed many sectors, including financial services, and particularly in the realm of remittances. Remittance services, crucial for millions of migrant workers worldwide, facilitate the easy, cheap and quick way to send money home across borders. However, as these services have proliferated, they have become vulnerable to financial crimes such as money laundering and terrorism financing. This is not new to the financial services sector, but remittance operators are having to play catch-up.

Recognizing the problem

The recent initiative by Singapore-based Aleta Planet, which introduced an Alipay remittance feature for faster and more secure transfers to China, exemplifies the sector’s innovations. This development positions Aleta Planet uniquely in the market, offering transfers via China’s three major payment networks. Yet, the inclusion of additional security measures signifies a broader trend towards enhancing system-wide security in remittance services. Such measures are critical where the ease of digital transactions meets the complex web of global financial regulations.

The global remittance market, valued at US$737.05 billion in 2023, is projected to grow to US$928.21 billion by 2027. This scale and growth rate spotlight the sector’s susceptibility to criminal abuse. Consequently, remittance services and their banking partners are increasingly subject to stringent regulatory compliance frameworks worldwide.

Understanding unusual behaviour

However, conducting thorough, in-depth KYC for the millions who use remittance services remains a challenge. Consequently, the burden often falls on transaction monitoring as the significant layer of protection. Thus, identifying what constitutes anomalous activity is central to compliance efforts.

Compliance teams monitor vigilantly for transactions that deviate from expected patterns, such as those of unusual size or frequency, funds flowing to or from unexpected locations, and overly complex transactions that may aim to disguise the origins of funds. Such activities necessitate human oversight for further investigation, underscoring the importance of automation to manage the vast volumes of transactions, and human intervention to interpret patterns of behavior in  range of contexts.

Finding the right compliance solution

This dual approach to compliance emphasises the need for specialized, reliable, and adaptable software that can meet the needs of different businesses within the remittance chain. Genuinely effective compliance services must offer comprehensive monitoring, and analytics tools, to arm compliance officers with the evidence-based insights essential for informed decisions.

Compli from Essiell Compli matches this need exactly. Developed by experts with in-depth experience, Compli offers a uniquely customizable compliance solution that is both consistent and precise. It equips users with the information necessary to mitigate the risks associated with financial crimes and meet compliance requirements by default.

Thinking ahead for global protection

As remittance services continue to grow, the need for effective compliance mechanisms in this specific field should be obvious. The integration of technology and regulatory compliance, exemplified by platforms like Compli, is essential for safeguarding the global financial system against vulnerabilities. For financial institutions and their partners, investing in robust compliance services is more than a regulatory requirement. It’s a strategic imperative to ensure the integrity and trustworthiness of their services in the digital age.

By Declan Morton, staff writer at Essiell-Compli.

For reference

Aleta Planet Introduces Alipay Feature for Faster, Secure Remittances to China, Fintech News Singapore, January 25, 2024

Global Remittance Market Report 2023-2028 and 2033  – Yahoo! Finance, January 25, 2024

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