Coworking spaces are tasked with the important process of doing due diligence checks, which include anti-money laundering (AML) and know-your-customer (KYC) checks.
But, you already completed these checks before onboarding a new coworker, plus they all passed with little to no problems.
The good news is that your onboarding is compliant. But these checks don’t stop at that. Due diligence checks, especially AML, are checks that require constant maintenance. This is what is known as AML transaction monitoring.
You might be thinking that you are a coworking space, not a bank. You don’t know what your coworkers get up to. So, how does this concern you as a business?
Financial institutions have strengthened their anti-money laundering (AML) and counter-terrorist financing (CFT) controls over the past few years. The Financial Action Task Force (FATF) has also observed a trend toward criminals increasingly concealing and laundering the proceeds of their activities through non-financial industries.
The FATF defines designated non-financial companies and professions (DNFBP) as any business or profession that creates a risk of money laundering but is not categorised as a financial institution.
Coworking spaces offer criminals the perfect place to cover their illegal transactions, especially when they get to use the address of the coworking space as their business address. And criminals have also heard of coworking. This puts coworking spaces at risk, and constant AML maintenance is the key to success.
What is AML transaction monitoring?
Transaction monitoring for anti-money laundering (AML) allows banks and other financial institutions (FIs) to analyse how their clients spend and move money in real-time. This step provides the organisation with a complete picture of their client, including risk levels and anticipated future activities.
It is also worth emphasising that community coworking facilitates monitoring because the emphasis is on getting to know our clients in far deeper ways than regulators could think.
However, there is a disadvantage to this: we don’t know coworkers who don’t come in as frequently. That is why it is vital to have a process in place, whatever it may be, to ensure that no one is left out.
Transaction monitoring includes tracking client transactions, as well as evaluating past and present customer information and interactions to provide a complete picture of consumer behaviour. Transaction monitoring, for example, is performed on deposits, withdrawals, and transfers.
Why do you need AML transaction monitoring?
This anti-money laundering monitoring helps banks and financial institutions minimise false positives. Businesses must mitigate these AML/KYC red flags if they want to remain compliant.
Transaction monitoring is not currently required by law for financial institutions everywhere in the world, but neglecting to have one could have serious consequences.
Implementing a risk-based strategy necessitates ongoing customer monitoring. Failure to apply this system may result in not only a financial institution’s reputation being harmed, but also in severe fines.
What is the process?
Transaction monitoring is a complex and time-consuming operation that cannot be completed manually. The method may differ depending on the needs of a specific entity, but the basic aspects are fairly consistent.
Monitoring of transactions goes beyond a specific threshold – client assessment; blocklist and penalty list screening; risk level assignment; and end-report delivery
Naturally, transaction monitoring is not the only thing to be concerned about; it is part of a larger picture that necessitates a collaborative approach for genuinely effective risk management.
How do you stay compliant with AML transaction monitoring?
Cowork.tools offer in-house expertise at your disposal. To stay on top of the latest legal developments, our compliance officers have degrees, are certified, and participate in continuous learning.
A simple 1-2-3 onboarding process. In addition, a transparent and objective study of potential consumers, weeding out those with illegal motives and bad actors, as well as preventing structural or unconscious bias by in-house workers.
Additionally, we have a customised risk assessment approach that makes sure that your AML/KYC due diligence is the right compliance for your business.
And lastly, our payment platform is in collaboration with a financial institution that is fully AML/KYC compliant.