/Anti Money Laundering (AML), what it is and regulations

Anti Money Laundering (AML) refers to the prevention of illegal practices used to hide or disguise the origin of illicitly obtained money to make it appear to come from legitimate sources. These regulations are essential for maintaining the integrity of the global financial system and preventing criminal organizations from laundering funds.

According to the International Monetary Fund (IMF), money laundering represents approximately 5% of the world’s GDP, amounting to nearly US$2 trillion annually. This staggering figure underscores why robust AML policies are mandatory for financial institutions and diverse business sectors worldwide.

Money laundering is a serious crime that often involves smuggling, illegal arms sales, embezzlement, insider trading, and computer fraud. Implementing high-end technology is the only way to effectively detect these activities and report suspicious patterns to the competent authorities in real time.

Veridas provides advanced identity verification tools that empower companies to comply with these strict laws. Our technology ensures that the origin of every transaction is transparent and that every participant is correctly identified through biometric certainty.

What is AML (Anti Money Laundering)?

AML regulations require financial institutions and other companies to implement specific measures to detect and prevent money laundering activities. These rules protect the financial system from abuse and help law enforcement agencies investigate and prosecute complex fraudulent cases across international borders.

Some of the mandatory measures include customer identification (KYC), transaction monitoring, risk assessment, and continuous employee training. Organizations must maintain detailed records of financial transactions and report any suspicious activity to national and international regulators immediately to avoid severe penalties.

Identity verification or Know Your Customer (KYC) is an indispensable requirement within these frameworks. By verifying the identity of beneficial owners, companies can prevent criminals from using front companies or fake credentials to move illicit funds through legitimate channels.

Veridas enhances this process by offering a 100% proprietary solution that combines document validation with facial biometrics. This ensures that the person performing the transaction is the legitimate owner of the identity provided, reducing the risk of fraud significantly.

AML Identity Verification Solutions: Veridas KYC

In the digital age, manual verification is no longer sufficient to meet the speed and security required by modern regulators. Veridas KYC: Streamlined Identity Verification for AML Compliance offers a fully automated and secure way to onboard customers while staying 100% compliant with global laws.

Our solution utilizes a visualization dashboard and video-identification technology to capture high-quality data during the registration process. This allows for a seamless user experience while providing the business with an irrefutable audit trail for compliance officers and external auditors.

By integrating our biometric authentication system, businesses can verify identities in seconds rather than days. This efficiency reduces the cost of compliance and allows teams to focus on high-risk cases that require human intervention and deep analysis.

The Veridas platform is designed to adapt to various jurisdictions, from the SEPBLAC in Spain to FinCEN in the United States. This flexibility makes it the best choice for global companies seeking a single, reliable partner for their international AML identity verification needs.

Who sets AML regulations?

At the international level, the OECD’s Financial Action Task Force (FATF) establishes requirements that influence almost all countries and jurisdictions worldwide. These standards provide a common framework for countries to develop their own specific laws and enforcement agencies.

Regulatory frameworks vary significantly depending on the jurisdiction where the business operates. In the United Kingdom, the Financial Conduct Authority (FCA) sets the rules, while in Canada, the Financial Transactions and Reports Analysis Centre (FINTRAC) is the governing body in charge.

These bodies are empowered to impose heavy fines, sanctions, and even criminal penalties on financial institutions that fail to comply with regulations. Negligence in AML compliance can lead to the loss of operating licenses and massive reputational damage that is hard to recover.

Relying on a trusted provider like Veridas ensures that your technology is always up to date with the latest regulatory changes. We participate in international sandboxes and follow the AI Act guidelines to provide compliant and ethical biometrics to our global clients.

What are the benefits of AML systems?

Beyond the moral and legal obligation to fight against illicit activities, robust AML systems enable companies to protect their brand reputation. High security standards increase shareholder value and build long-term trust with customers who value safety and institutional integrity.

Automated systems help businesses avoid consent orders and civil penalties that could be imposed for non-compliance or simple administrative negligence. Reducing the risk of fines allows companies to allocate capital to growth rather than to risk exposure and legal defense funds.

The use of AI-based technologies improves the user experience by enabling convenient and secure online trading. Customers no longer need to visit physical branches to verify their identity, as they can do it from their mobile devices with total security and ease.

Veridas helps organizations reduce IT and employee costs related to manual verification processes. Our anti-spoofing and fraud prevention technology ensures that the person behind the screen is real, preventing deepfakes and advanced presentation attacks from compromising the system.

Industrial Use Cases for AML Compliance

• Banking: Implementing Customer Due Diligence (CDD) to ensure the identity of customers during high-value account openings.
• Telcos: Verifying the identity of users before enabling international roaming or high-cost digital services to prevent subscription fraud.
• Insurance: Validating the identity of claimants before processing large indemnity payments to ensure funds reach the legitimate beneficiary.
• Gaming: Ensuring that players are who they claim to be and meet age requirements while monitoring for suspicious betting patterns.

AML Identity Verification FAQs

What is KYC in AML?
Know Your Customer (KYC) is a critical component of AML regulations. It focuses on identifying and verifying the identity of customers to ensure they are not involved in illegal activities like money laundering or terrorism financing.

Why is AML compliance important for businesses?
AML compliance is vital to avoid heavy legal fines, protect the company’s reputation, and prevent the financial system from being used for criminal activities. It ensures that the business operates within the legal framework of its jurisdiction.

How does biometric technology help with AML?
Biometric technology, such as facial recognition, provides a more secure and accurate way to verify identity than traditional passwords or paper IDs. It creates an irrefutable link between the physical person and their digital identity.