Source of funds checks enhance AML compliance
Enhanced source of funds verification and statements of wealth are a crucial part of the ongoing effort to create a secure and transparent financial environment. While they may seem complex, they are essential in safeguarding against money laundering, a practice which, although involving only a small percentage of transactions, plays a major role in criminal activity globally.
How big is money laundering worldwide?
Money laundering, the process of making large amounts of money generated by criminal activity appear to have come from a legitimate source, is a global problem. Estimates suggest that about 2–5% of global GDP is laundered annually. This staggering figure underscores the need for stringent measures to prevent such funds from infiltrating the legitimate financial system.
How do source of funds checks work for most people?
For approximately 95% of the population, undergoing enhanced source of funds checks and providing statements of wealth is a straightforward process. These checks are designed to verify the legitimacy of funds and wealth, ensuring that all financial activities and assets are derived from lawful sources. For most individuals, this process is simple and part of standard financial due diligence.
What about the other 5%?
The primary focus of these enhanced checks is to deter the 5% of funds at risk of being laundered. Although this percentage might seem small, the absolute value it represents is significant and poses a substantial risk to the integrity of the global financial system. By rigorously scrutinising sources of wealth, financial institutions can identify and prevent illegal activities such as money laundering.
Why source of funds checks are so important
What is our role in source of funds checks?
As part of the global community, it is our collective responsibility to ensure that our financial system is not misused. Enhanced source of funds checks and statements of wealth are crucial tools in this endeavour. They help to identify and prevent the flow of illicit funds, thus maintaining the integrity of our financial institutions and supporting the global fight against financial crimes.
What is the benefit of compliance?
While enhanced source of funds checks and statements of wealth might seem cumbersome, they are necessary and usually straightforward for the majority of the population. These measures are critical in detecting and deterring the minority of transactions that pose a risk of money laundering. By participating in these processes, we all contribute to a more secure and transparent financial environment, protecting our global economy from the adverse effects of illegal financial activities.
To find out more about how Checkboard can enhance your source of funds checks, get in touch with us today.
