What is AML Compliance? 

Anti-Money Laundering (AML) is a broad term that encompasses the vast array of laws, regulations and policies that are created and implemented to combat money laundering and other associated types of financial crime. Ultimately, these laws aim to make it impossible to make use of any revenues generated by criminal activities.

Every year, hundreds of millions of dollars are handed down to companies as punishment for non-compliance with Anti-Money Laundering (AML) legislation. In the most serious instances of a criminal offence, accountable individuals within these companies are charged and given jail time. 

A report by Comply Advantage has ranked the industries that incurred the highest total value of fines for AML non-compliance during 2023 (a ranking that inevitably changed every year). 

3. Gambling: $475 Million 

The gambling industry incurred the 3rd highest total value of fines within 2023. Within the gambling industry, the most common AML compliance violations included accepting bets before being formally licensed as a registered gambling institution; accepting illegal wagers; offering and awarding illegal winning bonuses; violating advertising rules; and failing to prevent excessive spending. 

2. Banking: $835 Million 

The banking industry saw a significant decrease in total annual AML-related fines in comparison to previous years. 

Nevertheless, substantial fines were still handed out, many of which were the result of major investigations and assessments being concluded. Regulatory bodies for AML compliance (such as the Financial Action Task Force (FATF) and country-specific bodies) routinely assess financial institutions to study whether they are taking sufficient action to address and mitigate the risk of money laundering. 

If such an investigation reveals shortcomings in the AML policies of a particular institution, that institution is fined. For example, an institution may be fined for failing to address deficiencies in its Sanctions and Watchlist Screening policies, a regulatory body will issue that institution with significant fines. 

1. Cryptocurrency: $5.8 Billion 

The global crypto industry amassed the highest total value for AML-related fines in 2023 with a staggering $5.8 billion – a value which results from only 11 fines.

The most critical AML compliance violation was the failure to conduct identity verification checks on customers as is required by law. Such checks generally fall under the banner of Know Your Customer (KYC) checks and are provided by ThisIsMe. 

Other violations included: cybersecurity failings; failure to register as a money transmitter; and breaching of international sanctions laws. 

How to Stay AML Compliant 

Compliance with AML legislation requires a comprehensive and consistent effort to find and mitigate the risks of money laundering occurring. 

Some of the most common breaches that result in AML non-compliance include: 

• Insufficient Customer Due Diligence and/or Enhanced Due Diligence Checks: every year, hundreds of millions of dollars worth of fines are incurred because a company did not comprehensively verify the identity of a client. This means that the proper due diligence checks – such as basic Know Your Customer (KYC) checks – were not carried out. KYC products and solutions are easy to source and implement (explore our KYC services here). 
• Improper Sanctions and Watchlist Screening: all financial institutions, such as the four listed in this article, are required to check whether an individual or entity they are doing business with has been placed under sanction anywhere in the world. This process is commonly known as watchlist screening and is an essential part of AML legislation. 
• Failure to Submit Suspicious Activity Reports (SARs): AML laws compel many companies and financial institutions to scan the transactional patterns of their clients to detect and flag transactional patterns that are suspicious and may signal an ongoing money laundering operation. 

Ensuring that your business stays compliant with AML regulations will require the use of several digital tools for due diligence. What are these tools and how can you access them? 

Digital Solutions for AML Compliance in South Africa 

These solutions – Know Your Customer (KYC), Enhanced Due Diligence, and Sanctions and Watchlist Screening – are all provided by ThisIsMe. 

As South Africa’s leading provider of world-class due diligence and digital onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. We offer a wide range of FICA-compliant KYC services that encompass politically exposed person checks, account verification services, and company sanction and credit checks. To experience our full suite of due diligence solutions and see how we can help your business meet its AML/CFT regulatory obligations, schedule a demo by contacting our team here.