Money laundering is a serious financial crime globally, and every country has AML compliance and laws to deal with it strictly. Canada is a country where financial regulatory laws are stringent against people involved in money laundering, terrorist financing, illicit financing, tax evasion, and other illegal activities. Implementing robust AML checks is not only a legal obligation but also a crucial step to safeguard financial and non-financial industries. AML checks are significant in dealing with money launderers, financial criminals, and reputational damage.
What Do Money Laundering Stats Say in Canada?
- According to Resolver’s news, in 2023, Canada faced an estimated $113 billion in laundered money. It highlights the universal nature of this crime within the nation’s economy.
- The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) plays a massive role in combating money laundering and financial crimes. According to FINTRAC’s annual report, financial intelligence contributed to 266 major investigations into financial crimes.
- According to the 2024 Money Laundering and Financial Crime Report by SmartSearch, drug trafficking accounted for nearly a third (29.3%) and financial fraud at 22.2%.
- FINTRAC has observed a 750% increase in suspicious transaction reporting related to money laundering.
Why Do AML Checks Matter For Businesses?
Anti-money laundering solutions play a major role in financial businesses in Canada, as they assist with AML checks that ensure genuine business identities without financial risk. Implementing effective AML checks gives various benefits to organizations and companies that are operating their businesses in the Canadian market, as they are:
Mitigating Financial Risks:
AML checks help identify identities associated with money laundering, terrorist financing, and other illegal activities. It helps assess financial risks and take action against them. Therefore, AML screening solutions assist in identifying illegal identities that are harmful to businesses and mitigate financial risk for companies.
Enhance Due Diligence (EDD):
AML checks identify high-risk clients and help in enhanced due diligence processes for financial and non-financial industries. This type of risk assessment safeguards businesses from financial criminals, money launderers, and fraudsters.
Transaction Monitoring:
AML checks are also significant for monitoring client transactions in real time. AI and machine learning algorithm-based advanced AML solutions help to identify suspicious patterns of transactions related to money laundering and terrorism financing. They assist in monitoring the onboarded client’s suspicious activities and give reassessments to take action against them. It safeguards the business from financial crimes and prevents it from ruining its reputation.
Ensure Regulatory Compliance:
AML checks ensure AML compliance according to FINTRAC’s standards and prevent regulatory penalties and legal procedures. It works as an AML compliance solution and keeps businesses compliant in the digital age.
Fraud-Proof Reputation:
Anti-money laundering checks ensure genuine business identities and prevent financial crimes. They help create a robust security system that doesn’t allow access to confidential data. They ensure fraud-proof business and secure transactions. This type of reputation in the competitive market builds trust for new vendors, investors, and clients.
Quick Onboarding Process:
AML solutions identify and verify identities by conducting thorough background checks from various adverse media databases, PEPs, and sanction lists. They help authenticate business identities within seconds and deliver accurate results that assist in a fast client onboarding process.
Industries where AML checks are Mandatory:
Financial Institutions:
KYC checks are significant for Banks, credit unions, trust companies, foreign exchange dealers, loan or financing businesses, and other financial institutions. They help authenticate clients’ identities and check their backgrounds for involvement in illegal activities.
Money Services Businesses (MSBs):
Some financial businesses, such as currency exchanges, money transfers, cryptocurrency exchanges, and other money orders, use AML checks to assure legitimate identities, mitigate risk, and secure business transactions.
Casinos:
Gambling is also a financial business in which gamblers participate in games and invest their money. Online casinos monitor transactions to operate their business legally and report suspicious activities.
Insurance Business:
Insurance companies perform AML checks on their customers to identify and verify their identity and background. It helps insurance companies operate their businesses smoothly according to regulatory standards and prevent financial losses.
Real Estate:
AML checks are mandatory in real estate businesses where Real estate brokers, agents, and developers perform AML checks on their clients before property transactions to ensure they are dealing with legitimate identities.
Accounting Firms:
Accounting Firms that provide accounting, bookkeeping, or tax services also perform AML checks for their high-risk customers and secure financial transactions.
Other financial businesses perform customer due diligence (CDD) processes, monitor transactions, and report suspicious activities to FINTRAC. AML software is mandatory for these businesses to perform AML checks on their high-risk clients and secure their business.
As we move into 2025, the significance of AML checks for Canadian financial and non-financial businesses is vital. Implementing comprehensive AML solutions improves your client onboarding process, builds trust, mitigates risk, ensures compliance, and prevents fraud. An AML compliance solution assists in building a fraud-proof reputation in the competitive market and prevents money launderers and financial criminals. As digital transactions and client onboarding rapidly increase in the digital business world, AML platforms are important for smooth business operations.
AML compliance is regulated to deal safely in the digital business and contribute to the integrity of Canada’s financial system. KYC Canada is a trusted and reliable identity verification company that provides an API for KYC solutions, AML solutions, business verification, ID verification, document verification, age verification, PEP, and sanction list verification. Their API is easy to use and can integrate with any existing system. They provide identity verification solutions for the financial and non-financial industries. Therefore, choose an identity verification system that assists in checking the background of the client related to money laundering and other financial crimes.