Money transfer businesses (MTBs) operate in a sector characterised by a long phase of sustained expansion. Growth statistics project a global market value of $83.2 billion by 2034. That’s a compound annual growth rate of 13.5%. In this environment, established enterprises are enlarging their networks, and new entrants are attracted by the sector’s opportunities. It’s fertile ground for business, and it’s fertile ground for criminal activities, including money laundering and fraud.
Risks and Responsibilities in Money Transfers
The risks are highlighted by a recent high-profile case. In the US, American Express has been fined $65 million for failing to prevent drug-related money laundering transactions. This incident highlights a critical vulnerability: the larger the operation, the harder it might be to monitor each transaction effectively. Conversely, smaller businesses may lack the sophisticated systems required to detect and manage illegal activities. To criminals, they are equally attractive targets for exploitation.
The key question then arises: How can MTBs, irrespective of their size, enhance their protection while remaining efficient and cost-effective? One answer is to adopt a careful and thorough methodology to ensure that compliance policies, strategies, and processes align with best practice in every way. A good example of this approach is outlined in a recent article by Francesco Fulcoli, CCO at Flagstone. Writing in FinExtra on 23rd May, he sets out a framework to work through to ensure a robust and adaptive approach to compliance. It’s worth a read – see below – and while the article is addressed mainly at fintech businesses, the principles can be applied successfully to any financial services business, including those offering money transfer services.
Best Practices for Compliance
For MTBs, effective compliance must follow the three Cs: comprehensive, customisable, and cost-effective. It should encompass rigorous Know Your Customer (KYC) protocols, including up-to-date anti-money laundering checks, anti-terrorism funding measures, and screenings against sanctions lists and politically exposed persons. Additionally, in-depth identity verification is crucial, alongside checks for stolen or resold ID documents. Transaction monitoring must be capable of building accurate profiles of typical behaviour, to then identify and flag atypical or suspicious transactions.
A leading solution that embodies these principles is Compli from Essiell Compli. Compli’s platform offers an unmatched blend of powerful features and innovative technology, making it an ideal anti-money laundering solution that is both comprehensive and future-proof. Its adaptability ensures compliance with rapidly changing regulations, while its continuous surveillance capabilities efficiently highlight potential risks. It’s an excellent investment for all MTBs, whether large multinationals or smaller entities such as start-ups and micro-enterprises.
Optimising Compliance for Growth
But whichever provider an MTB partners with, it is essential to ensure that the service offered is not only scalable to match the growth of MTBs, but also cost-effective. Additionally, it won’t be used to its full extent without a user-friendly interface. Likewise, MTBs should seek a service that provides seamless integration into existing systems and straightforward implementation.
With all these benefits combined, workflow is optimised. Human resources can be used where they matter – in evaluating the data rather than collecting and organising it. That way, the business – your business, perhaps – is empowered to make informed, risk-based decisions. With those in place and supported there is a confident approach to compliance. Then a business, free of operational doubts, can really work towards long term growth.
By Declan Morton, staff writer at Essiell Compli.
For reference: Digital Remittance Market Overview & Growth Rate Forecast for Next 5 Years, Whatech – Guest Post By Nidhi Bhawsar, 2024-05-24; Digital Remittance Market Rising at 13.5% CAGR to Hit $83.2 Billion by 2034, Yahoo! News/PR Newswire, 23 May 2024; American Express Fined $65 Million Over Money Laundering Failures, Regtechtimes, 27th May 2024; Regulatory Resilience: Fintech’s AML Frameworks through Comprehensive Gap Analysis and Methodologies, Francesco Fulcoli, CCO at Flagstone, FinExtra, 23rd May 2024.
