While all reporting entities are required to monitor transactions and report suspicious behaviour as a key component of their AML/CFT programme, some sectors face specific and unique challenges. We sat down with Colin Dixon, Senior Product Manager for Jade ThirdEye, to get his insights into how AML/CFT regulations, transaction monitoring obligations, and automation impact the remitters and payment service provider sectors.
Combining eight years of helping reporting entities modernise their AML programmes, along with fresh perspectives from his recent participation as a panellist in the ACAMS discussion on The Future of Transaction Monitoring: What Does It look Like, Colin’s valuable considerations for remitters and payment providers seeking to enhance their AML programme are as follows.
What is unique about the AML regulations for the remitters and payment provider sector?
Regulatory requirements for remitters are, at a high level, generally the same for all types of reporting entities and across jurisdictions – they need to meet their obligations of having a documented AML programme in place. These obligations include customer due diligence (knowing your customer), transaction monitoring capability (if required), and submitting relevant reports to regulators.
Perhaps the most significant difference for remitters and payment service providers is that they are often considered to be in a much higher risk category. As such, remitters and payment service providers need to be more diligent in order to avoid risk and contribute to the ultimate goal of reducing the impact of financial crime.
The sector is also quite a varied industry, in terms of size, technical sophistication, and jurisdiction. As a result of this, it can be challenging to identify or agree upon best-practices for the industry as what works well for one organisation in one jurisdiction may not work well in another. Therefore, flexibility in processes and technology to meet regulatory obligations is prudent.
How can remitters and payment service providers overcome barriers that arise from such technical sophistication?
In our experience, we have seen that automating as many tasks as possible is one of the best ways to address technical sophistication. This may sound counterintuitive, but by using automated technology to facilitate manual or highly repetitive tasks, you can free up your people to focus on more sensitive or intelligence matters such as investigating suspicious activities.
The benefits of automation come down to capability, volume, and ability to scale over time. Can you maintain a robust and reliable program that is also cost-effective for your business with your current processes? And do your staff spend time on the right things? Even at relatively low volumes, a simple and affordable automation tool can provide a lot of benefit for the investment.
In the remitter and payment service provider sector, one of the significant burdens of compliance – but a fundamental obligation to fulfil – is in prescribed reporting requirements. In New Zealand, this is in the form of prescribed transaction reporting of Large Cash Transactions (LCT) and International Funds Transfers (IFT). In Australia, there are similar requirements for International Funds Transfer Instruction (IFTI) and Threshold Transaction Reports (TTR). Transactions that meet these criteria have to be detected reliably, and then reports need to be submitted as quickly as possible. Once again, automating these processes can help remitters and payment service providers to comply with confidence.
How can Jade ThirdEye help remitters and payment service providers overcome their AML compliance burdens?
Jade ThirdEye is fit-for-purpose, automated AML software that helps remitters and payment service providers carry out their regulatory obligations. Jade ThirdEye is essentially a series of features that help facilitate the compliance process, which is broken down into three steps.
- Remitters and payment service providers input their data into Jade ThirdEye, which is flexibly implemented to respond to the fields and data of your core system.
- The Jade ThirdEye support team help set up rules based on your data that can reliably identify transactions that meet reporting conditions.
- When these reporting conditions are met, Jade ThirdEye generates auto-populated reports that can be sent directly to the FIU or AUSTRAC via an online system that we maintain.
This three-step process removes the manual labour, risk, and time from the required reporting process.
For remitters and payment service providers considering automation, what advice do you have for evaluating solutions or THEIR approach to implementation?
My advice for remitters and payment service providers is to consider your automation more holistically, as the cost of automating should be weighed against the benefits of reducing risk (and potential of substantial fines), creating efficiency, and allowing the business to meet its compliance obligations in a better way. This comes down to more than just the features in a solution - it’s about the whole solution, like how it’s priced, how easy it is to implement, how well it is supported, and the quality of long-term customer service. So, what makes a vendor or solution a good fit?
- The solution has to be flexible to work well for the entity based on the uniqueness of their risk profile. For example, if a reporting entity needs rules of a specific type or needs to make rule changes often, the system must make that easy, or the benefit won’t be there on the other side.
- The automated AML solution also needs to be reliable and cost-effective, which can mean different things to different entities. A smaller remitter with less technical expertise in-house will benefit from a hosted, easy-to-use solution with access to a support team when required. A larger business also benefits from these things but may require additional capability to support multiple branches in one system.
- The pricing model matters, too. For example, Jade ThirdEye is priced based on volume, which makes sense because that’s where the value is most evident for a customer, and a smaller reporting entity will only pay for what they need to monitor, without sacrificing essential features.
What are my three important takeaways for remitters and payment providers on AML compliance?
The most important thing is to have a reliable, risk-based anti-money laundering programme in place and to operate it effectively - whatever that means for your business.
It may be time to ditch the spreadsheets! Suppose your business is growing or your employees’ time can be spent on more important things without sacrificing the quality of your programme. In that case, you should consider automation tools that can help you remove manual processes and create reliability and efficiency.
Lastly, not all solutions are created equal. Consider your risk profile, business needs, and how you would ideally like your compliance team to operate, then work backwards from there. You may find what you first thought you needed is somewhat different than what you need now or in the near future.
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