The responsibility to prevent money laundering requires institutions to adopt appropriate measures to protect themselves and the economy against financial crimes.
Whether an organization is required to have an Anti-Money Laundering (AML) program depends on where it conducts business and the regulations in those jurisdictions.
In Brazil, the obligation to have an anti-money laundering compliance program is outlined in Law No. 9.613/1998, known as the Money Laundering Law. This law mandates that certain sectors are required to implement money laundering and terrorist financing prevention programs. These sectors include:
Financial Institutions: This includes banks, credit cooperatives, securities brokers, credit card administrators, and other institutions.
Complementary Pension Companies: Institutions offering private pension plans.
Mercantile Factoring Companies (FIDC): Organizations dealing with investment funds in credit rights.
Currency Exchange Houses: Establishments conducting foreign currency exchange operations.
Gambling Companies: Casinos and other gambling activities.
Insurance Companies: Companies providing insurance services.
Leasing Companies: Companies engaged in financial leasing of movable or immovable assets.
Factoring Companies: Organizations acquiring credit titles from third parties.
Credit, Financing, and Investment Companies: Institutions operating in the credit and financing sector.
Real Estate Exploitation Companies: Companies engaged in the purchase, sale, or exploitation of real estate.
But what exactly do AML programs require companies to do, and how can you ensure your organization achieves compliance without compromising the experience of honest customers? Let's find out below.
What is AML?
AML stands for Anti-Money Laundering, a set of practices aimed at preventing money laundering, reducing tax evasion, terrorist financing, drug trafficking, and other criminal activities. Money laundering commonly occurs when criminal organizations need to legitimize illegally obtained money and, in doing so, need to conceal their identities.
In an attempt to move money without being detected, criminals go through three stages:
Placement: They place their "dirty" money into the financial system by depositing it into bank accounts. Typically, these deposits are smaller amounts of the total value to make them less suspicious.
Layering: They move their "dirty" money through various transactions to separate their identity from these deposits. Layering transactions can involve a series of bank transfers or using funds to purchase cryptocurrency.
Integration/Extraction: They attempt to "clean" their money by investing it in the economy. This stage often involves cash purchases, such as real estate or equipment for a business.
There are measures institutions can take to prevent or capture this activity:
Know Your Customer (KYC):
High-security identity verification (such as document and biometric verification) during onboarding makes it much harder for criminals to separate their identity from illegal funds or use a fake identity.
Record Management:
Using software to record and analyze transactions helps institutions recognize suspicious activities, such as large cash deposits or repetitive transfers.
Beeteller ID and AML Compliance Solution
Beeteller ID enables organizations to implement the necessary tools for their AML compliance program. Identify and prevent money laundering risks with automated digital onboarding solutions that include biometric and document validation, analysis, and verification of registration data from over 100 reference sources. The entire process takes place within minutes, without causing friction for honest customer onboarding.
Learn more about our compliance program. Contact our team of experts.
