Institutions Without Strong AML Practices could Face Dire Consequences – experts

Worried about the implications of money laundering on businesses, especially in financial technology, a group of financial experts who spoke at a panel session at the just concluded AfricaNXT event in Lagos have proffered solutions on how to address the challenges of money laundering.

Focusing on the theme: ‘The Growing Threats of Money Laundering in the Financial Sector-KYC and AML as a Disabler’, the panelists highlighted the consequences of money laundering and advised financial institutions, including small businesses, on how best to avoid it.

Speaking on the panel, Enyioma Madubuike, Chief Legal Officer at Kora, mentioned that financial institutions that do not have solid anti-money laundering practices could face dire consequences such as attracting huge fines from regulators, loss of reputational integrity, loss of trust and confidence from partners and also lead to exposure of criminal charges.

Madubuike said: “[businesses] must first understand the space they operate in and the business dynamics. SMEs may not have the capacity that big enterprises have to generate and analyse data, but they should have the ability to generate and analyze data that will help them have a proper understanding of the space they operate. SMEs must understand the core essentials of anti-money laundering to enable them to do legitimate businesses that will make them competitive. SMEs may not have the resources to monitor business risks, but they must use their little resources to protect themselves from money laundering.”

On how financial institutions can use Blockchain technology to ensure transparency in business, the DMD, E-Tranzact, Hakeem Adeniji-Adele, who was represented, said the adoption of Blockchain technology would help financial institutions to decentralize the business, allowing staff to have real-time validation of the business, and prevent money laundering.

He advised that financial institutions must develop frameworks and policies that protect them from money laundering and strictly adhere to these policies. He also mentioned that a continuous risk assessment must be carried out to block all loopholes that could lead to money laundering.

The Chief of Staff/Company Secretary, Youverify, Simi Opayemi, further stressed the need for financial institutions to use technology to strengthen their KYC and AML processes, saying that technology would further strengthen the existing architecture of these processes and block possible loopholes to money laundering.