In an increasingly interconnected world, the traceability of financial transactions is becoming a crucial element in the fight against money laundering and terrorist financing. But not only for national and international regulatory authorities. Companies must be able to detect and provide a transparent, reliable, verifiable and, above all, explainable trace of any financial flow or transaction, in real time and at any time, in relation to sanctions lists (Assets Freeze, PEP, AME).
Traceability of financial transactions
Definition
The traceability of financial transactions involves all the operations, solutions, methods and tools needed to guarantee their compliance. Ultimately, it means being able to explain all financial flows and, where applicable, demonstrate that they have complied with current compliance regulations, notably by comparing these transactions with 'listed entities' or sanction lists (Assets Freeze, PEP, AME) in order to provide a transparent, reliable and explainable trace.
How do you trace?
A company needs to implement tools and solutions with functionalities that enable it to effectively validate the entire AML (Anti Money Laundering) and AML-CFT (Lutte Contre Blanchiment et le Financement du Terrorisme) compliance system. The aim is to screen and detect counterparties with regard to "listed entities" or sanction lists:
- Global and regional sanctions
- Asset freezes
- PEP and RCA (Politically Exposed Persons and Relative & Close Associates)
- Unfavorable media
- Beneficial Owners
- Identification of embargoed countries and currencies
- Private lists (Dow Jones, Acuris)
- Open data (INPI, ORIAS, deceased persons, etc.)
This will enable the company to provide compliance departments and regulatory authorities with an audit trail, or even clear and precise proof that it has complied with its obligations to monitor and detect behavior, or even security breaches, imposed by the AML-CFT and KYC (Know Your Customers) compliance rules.
Elements of suspicion on financial transactions:
- Unusual or abnormal frequency or volume of transactions
- Transactions to high-risk, sanctioned or embargoed countries or currencies
- Transactions to PEP, sanctioned or high-risk individuals
- Negative media coverage of customers
Challenges and obligations for companies
The obligations of companies are governed by the following texts:
- The European Payments Directive PSD 2 comes into force on May 15, 2021
- Articles L.514-4-1 to L.514-14-2 of the Monetary and Financial Code
- Law No. 2016-1691 of December 9, 2016, known as Sapin II, on the fight against corruption and the modernization of political life.
- Law No. 2017-399 of March 27, 2017 on the duty of care of parent companies and ordering companies.
- The European Directive on the Duty of Vigilance
The contribution of latest-generation RegTech
The use of latest-generation RegTech (Regulatory technology) solutions based on Augmented Intelligence - combining human, collective and artificial intelligence - will enable us to meet the challenges of traceability, while drastically reducing the processing of suspicions by providing automated regulatory intelligence! They provide the benefit of interconnected tools that integrate via APIs with all types of customer or third-party files existing in an IS, to accelerate anomaly detection and identify potentially criminal transactions in real time. RegTech solutions limit time-consuming and repetitive tasks thanks to intelligent automation with powerful analysis engines, and thus streamline reporting processes.
AP Filter instantly filters and detects transactions. The optimized interface of this turnkey Saas and Full API solution, integrated with Core Banking systems, delivers traceable and justifiable responses in real time, and remains effective on large volumes for matching transactions and customer portfolios with 'listed entities'.
- Compatible with various transaction formats: ISO 20022 (SEPA, SCT, MDD, MX), Swift FIN MT...)
- Filtering using over seventy criteria (names, countries, currencies, BIC, IBAN, etc.)
- Easily configurable reduction engine to minimize the number of suspicions and ensure smooth, risk-free transfers.
