According to Mazars, between 2011 and 2019, there would have been a 60% increase in sanctions imposed in the fight against Money Laundering and the Financing of Terrorism (LCB-FT). For businesses, banking compliance is therefore of crucial importance. But what exactly does it cover? What regulations are in force? And what preventive measures should be adopted? We take stock together.
Banking compliance is a major challenge for businesses, with a range of risks and potential consequences. Penalties for non-compliance with regulations can be severe, ranging from hefty fines to business restrictions, and even criminal proceedings against managers.
Banking compliance must be respected by financial institutions but not only. We tell you more!
Financial institutions are the first authorities to have to comply with a banking compliance process. For example, we think of banks, to insurance companies And to asset managers.
To ensure banking compliance, they must put in place internal processes and develop regular control systems.
Les undertakings are also required to comply with the legislation in force. For them, the legislation takes a slightly different turn than for banking institutions.
Rather, it is about check your customer base, also called KYC and to verify third parties.
Official bodies act as regulators. Their importance is major since they allow Define standards and ensure their implementation.
When we talk about regulators, we think in particular of:
Their role? Oversee compliance with regulations by financial institutions. In the event of non-compliance, these authorities may impose sanctions.
According to Article 561-2 of the Monetary and Financial Code, several institutions are affected by the LCB-FT law, namely:
Its meaning is simple, all businesses involved have an obligation to verify their customers' information at the various stages of the journey.
To find out more about banking players, see our article: Focus on the various banking players
Before establishing a commercial relationship, it is imperative to carry out a thorough identification of the beneficiary. In other words, it is essential to accurately determine who the real beneficiaries or owners of the transactions in question are. This ensures a total transparency And to se comply with regulations in force.
By clearly identifying the individuals or entities that benefit from business transactions, you reduce the risk of fraud.
Throughout the duration of the commercial relationship, it is imperative to keep the third party repository up to date. Indeed, all information relating to business partners must be regularly updated and checked by the teams concerned.
For example, in case of changing bank details such as the IBAN number, the closure of a company or its merger with another entity, a new verification must be carried out, in particular through checks with external databases such as SEPA MAIL. The SEPA MAIL a database that lists information relating to financial transactions in the SEPA zone (Single Euro Payments Area). This ensures the accuracy and reliability of the data.
By keeping the third party repository constantly up to date, businesses can strengthen their ability to identify and mitigate potential risks throughout the business relationship.
At the end of the business relationship, it is important toarchive all documents and related information to the beneficiary's account for a period of five years. This practice guarantees the traceability and preservation of data.
By keeping these documents, businesses can respond to possible requests for audits or subsequent investigations, as well as any other compliance requirements.
To strengthen the unity of anti-money laundering measures, new internal procedures must be established within the company. In particular, we think:
The Sapin law is adopted in 2016 and helps fight corruption and money laundering. But who must comply with this law? These are the companies with a turnover greater than or equal to 100 million euros and having more than 500 employees.
This law includes several essential points that each institution must put in place: a code of conduct, an internal alert system, a risk mapping, procedures for evaluating third parties, internal control processes and the establishment of a risk training system.
The aim of this law is to involve all core businesses and departments so that the company is armed against fraud.
And to arm yourself against fraud, what better than set up an internal anti-fraud unit ?
Shortly after the September 11, 2001 attacks in the United States, the International Financial Action Task Force (FATF) expanded its scope of action to include the fight against money laundering (AML) and the financing of terrorism. Regulations in this area aim to combat both money laundering (origin of funds) and terrorist financing (use of funds).
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Today, companies that fight against money laundering do so for several reasons:
They comply with regulations, which means monitoring customers and suspicious transactions as explained above. They protect their reputation. They minimize the costs associated with fines and sanctions.
To go further, bank fraud: What are the risks and consequences?
To fight against fraud, banking institutions use what is called SEPA MAIL. Verifications with SEPA MAIL involve consult this database to validate banking information, such as the IBAN number, in order to ensure their accuracy and compliance with SEPA standards. This makes it possible to detect any anomalies or inconsistencies in bank data and to avoid errors or potential fraud.
In order to strengthen this fight against money laundering and the financing of terrorism (LCB-FT), financial institutions are also turning to anti-fraud detection solutions.
Thanks to tools that use advanced algorithms and artificial intelligence to analyze vast amounts of financial data and identify suspicious patterns.
By examining transactions in real time, these solutions are able to identify unusual activities or Fraudulent and immediately alert compliance teams. These solutions allow financial institutions to take quick preventive measures to block suspicious transactions and prevent money laundering.
At Finovox, we have developed a solution for detecting fraudulent documents. His interest? That you can Divide by 6 the document fraud of your business! Invest in our solution to receive detailed reports that allow you to effectively report suspicious activity.
By fighting money laundering, you demonstrate your commitment to protecting the integrity of the financial system. So interested? Request a demo from one of our experts to find out more.
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