money remittance system

Anti-Money Laundering Compliance in Money Remittances

With the emergence of new technologies, we can see a spike in mobile-based money transfer channels. The international money remittance industry is an ever-growing sector, and last year remittance industry proved its resiliency during the global crisis. Experts believe the remittance industry may earn up to $930 billion by the year 2026.

The remittance system is a financial service, and like any other financial service, there are some risks involved. Financial crime such as money laundering is one of the primary threats. With continuous development in the remittance system, the possibilities of these risks also rise. Therefore, the remittance industry has heavy regulations to eliminate or reduce the chances of financial or cybercrime.    

Money Laundering within Money Remittance

In the global money remittance system, money transfers are frequent, which may carry risks like money laundering. The main reason behind this risk is the crime opportunities offered by such channels. One of the significant factors is, these channels are difficult to audit by the required authorities. Criminals can easily carry out an anonymous transaction in the remittance process to launder money. Financial criminals can use money mules to send and receive money. 

We should also consider the regulator’s failure to check the regulation’s compliance creates a gap in the industry, and criminals can evaluate this gap with ease. Furthermore, organisations that provide remittance services need to comply with all the regulations in place. Not reporting any suspicious activity or not applying the necessary rules to their clients also increases this sector’s risks.

Money Remittances Sector’s Regulations

As we have mentioned, there are some regulations in the money transfer industry. Remittance service providers are subject to rules based on the countries they operate out of; additionally, they need to comply with some global anti-money laundering regulations. Two institutions that have international regulations for money transfer are FATF and MONEYVAL. The basis of these regulations is due diligence, risk assessments, monitoring of actual customers and recognition of customers. 

  • Financial action task force (FATF): FATF is an independent body that provides economic system policies while developing and supporting existing policies to combat financial crimes. FATF sanctions exist to hinder money laundering, and all the financial institutions of the member states are required to comply.
  • Moneyval: Founded in 1997, MONEYVAL is the committee of the expert’s official name on evaluating anti-money laundering measures. It is the monitoring body of the council of Europe with 47 member states. MONEYVAL aims to ensure that all the member states have effective systems against money laundering and comply with all the relevant global standers in this area.

The Importance of AML Compliance

Money remittance service providers are reaching more regions globally and offering a wide variety of fast and convenient new services. And with growth comes new players and more competition into this sector. Security is paramount in an industry with so much competition. Money laundering poses security issues for the remittance industry, and such activities’ realisation has adverse effects on the sector. Such unlawful activities can harm the businesses’ reputation and cause them to fall behind in this competitive market. That is why AML compliance should be the top priority in the remittance industry.

Service providers who comply with the AML regulations provide high-quality customer service and greater operational efficiency. Without these regulations, safe and secure transaction will not be possible, and authorities can not identify illegal transactions. Unidentified illegal transactions can damage the economy of a country and are harmful to the institutions as well. 

Even the digital money transfer industry introduced solutions like “know your Customer” to combat money laundering. Complying with all the regulation helps institutions protect their reputation and ensures they are not subject to any penalty.

Know Your Customer (KYC) in the Money Remittance Sector

KYC is the application that regulatory remittance service providers are obliged to do. When a service provider does business with a new client, they follow the procedure to ensure their identity. This way can detect the criminals early and prevent the risks.

In addition to KYC, service providers also have to perform customer due diligence (CDD) and enhanced due diligence (EDD) as required. CDD procedure helps the service providers ensure that the client’s information is, in fact, correct. In comparison, EDD is used in the case of high-risk customers. These procedures aim to ensure that systems are not used for money laundering activities and identify and stop any perpetrator in the early stages.

Importance of Transaction Monitoring

The frequent nature of money transfers makes it impossible for the compliance officer to check all the transactions manually. Transaction monitoring is the technological response to this issue. With transaction monitoring, service providers create various rules, and transactions are controlled by defining these rules automatically in every transaction they arbitrate. 

With real-time alarm management, suspicious transactions can be flagged and warn the organisation. Following the alarm, a suspicious activity report (SAR) is made and sent to the concerning authorities.

Wrap Up

Regulations like KYC, CDD, Transaction monitoring are necessary for the money remittance sector to cope with money laundering risks. Regulations are put in place to ensure the safe and secure transaction of your hard-earned money. ATL Money Transfer enables you to remit money globally with our AML compliant software. Our services include cash pickups, instant mobile wallet delivery and 24/7 customer assistance. To know about all our services in detail, visit our website or write to us at

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