Criminals are always seeking new ways to commit financial crimes. With traditional banks tightening their compliance programmes, criminals are now turning to online platforms such as gaming, e-commerce, social media, and live streaming where large sums of money are exchanged anonymously.
The online world offers anonymity and facilitates transactions for obscure purposes. For example, in online gaming platforms, players often purchase in-game options or credits, providing an easy way to launder money without detection.
Similarly, live streaming platforms where influencers receive gifts or sell products can be exploited by money launderers using fake accounts to transfer money discreetly.
With the rapid growth of these digital markets, regulators are increasingly concerned about the potential for financial crimes through internet platforms.
Regulators have been ramping up sanctions and fines related to financial crimes. Major regulators such as OFAC, the EU, and the United Nations updated their sanctions lists frequently in 2020, and fines issued by OFAC alone exceeded US$1.3 billion in 2019.
Financial services sectors were initially the main focus, but now regulators are targeting non-financial businesses with high money laundering risks, such as virtual currency exchanges and crypto-fiat exchanges.
Internet companies have become a target for regulators, with penalties issued for sanctions violations due to deficiencies in their compliance systems. This highlights the need for internet platforms to strengthen their own defenses against financial crimes.
While internet companies have advantages over traditional banks in terms of technology and customer data, they lack experience in financial crime compliance. Implementing automated compliance systems can help them mitigate risks effectively.
By adopting robust financial crime screening solutions, internet companies can ensure a smooth customer experience while minimizing the risk of money laundering activities. Automation plays a crucial role in identifying and monitoring suspicious transactions.
Overall, internet companies must take proactive steps to enhance their compliance systems and stay ahead of criminals in the digital age.
This article was first published on June 29, 2021
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