Anti-money laundering (AML) checks are an important part of financial services as they manage and stop the flow of illegal funds through the system. They form a very important part of a compliance program for financial institutions. But how long do AML checks take? 

This article answers this question and showcases what causes the delays and how you can speed up the process to maintain compliance efficiency.

 

What Are AML Checks?

AML checks are a part of the anti-money laundering verification process that businesses use to ensure that they are not being used for criminal activities like fraud, terrorist funding and money laundering. The process involves the following elements:

 

1. KYC (Know Your Customer): 

KYC is verifying the identity of clients to ensure regulatory compliance and prevent fraudulent activities as part of the AML process timeline.

 

2. Customer Due Diligence (CDD): 

Customer due diligence involves assessing the risks associated with doing business with a customer by gathering all relevant information about them and their identity. CDD is also part of the AML screening time and contributes to the process essentially.

 

3. Ongoing Monitoring: 

After verification, your business is still expected to keep a close eye on transactions to make sure that illegal activities are put at bay 

An AML check means checking for financially related risks and client backgrounds. They are part of the regulatory compliance process and it is a necessary step for the Financial Action Task Force (FATF) and the European Union’s Anti-Money Laundering Directive.

 

Recommended: What is Anti-Money Laundering, and why does it matter?

 

How Long Do AML Checks Typically Take?

 

The timeline of an AML check varies significantly depending on several factors. While some checks can be done in mi, others can take days or weeks. On average an AML check duration should take few minutes or days but this hangs on the client you're dealing with how complex the transaction is and the systems used for the checks

 

1. Simple AML checks: 

Low risk individuals or businesses typically run through an AML screening very quickly. This kind of check would involve verifying basic information like address, name , date of birth against global sanctions list and other lists.

 

2. Complex AML checks: 

When a business or transaction triggers red flags, the process will take longer and this is the case for risky clients like Politically Exposed Persons (PEPs) or those from high-risk jurisdictions. These cases often require enhanced due diligence (EDD) and that can extend the screening time significantly and take even weeks to complete.

 

3. Automated vs. Manual Checks: 

 

Modern institutions use automated systems for AML screening as these systems can compare customer data against sanctions lists, and other databases. However, manual checks conduct better scrutiny but will increase the time significantly. Manual checks are more detailed as they consider financial history, source of funds and slow down the AML process timeline.

 

What Can Delay an AML Check?

Several factors can cause delays in the AML screening process. Understanding these factors can help prepare businesses for faster compliance check timing and avoid the delays.

 

1. Incomplete or Incorrect Information

Incomplete or inaccurate information is typically the reason checks are delayed. If a customer presents outdated information, it can be flagged as inaccurate and the AML screening time will be longer. Missing documents like proof of identification can also extend the AML check duration.

 

2. High-Risk Clients or Transactions

High-risk individuals typically require extra attention and it can cause delay in the KYC and AML process. If an individual is a PEP, on a sanctions list or comes from a country with weak anti-money laundering laws, you might need to employ enhanced due diligence (EDD). This might include collating additional information, conducting background checks and proof of legitimacy of income.

 

3. Manual Reviews

Manual reviews take more time than automated AML checks. Not all financial institutions have automated systems and as such, when transactions are flagged, more in-depth analysis is required. Manual reviews can slow down the AML check duration as the process involves reviewing documents, reaching out to the customer for clarification and analyzing transaction patterns.

 

4. Insufficient or Outdated Data Sources

AML screening is only as accurate as the information provided. If there are outdated data sources like sanctions lists, it can slow down the process. Regularly updating databases is important if you want to ensure the regulatory compliance process is effective. If there is outdated information, there will be a need to conduct a manual review process which extends the AML process timeline.

 

5. Time Zone Differences

Because of time zone differences, international clients can suffer delays in getting necessary details. If a customer is located in a different part of the world, they may have to wait a longer time for details to be verified which leads to an extended AML screening time.

 

How to Speed Up the AML Check Process

Delays with AML checks are inevitable but there are ways businesses can speed up the AML  check process without compromising on compliance:

 

1. Automate as Much as Possible

One of the best ways to speed up the AML process timeline is by automating processes. AML software can verify customer information and cross-check against global watchlists and flag risky clients faster. By using automated anti-money laundering verification systems, businesses can avoid human errors and speed up the process.

 

2. Improve Data Collection

Making sure that customers provide accurate information can greatly reduce delays in the AML screening process. Financial institutions can advise customers to submit identification documents and other relevant information from the onset. Clear guidelines and easy submission processes can help gather necessary information more effectively.

 

3. Use Up-to-Date Data Sources

Financial institutions should update their database and sanctions lists to ensure that they have the most recent information. This ensures that AML checks are completed faster and accurately.

 

4. Implement Risk-Based Approaches

Businesses with a large volume of customers need to implement a risk-based approach to KYC and AML. Low-risk customers can go through less complicated processes while high-risk clients should go through more detailed investigations. This approach helps to optimize the AML process timeline by focusing on higher risk cases.

 

5. Offer Real-Time Verification

Real-time verification and other advanced technology improves the AML process timeline. With technology, financial institutions can process checks faster without compromising the quality of compliance.

 

Why AML Check Timelines Matter

Timely AML checks are important for maintaining regulatory compliance and protecting businesses against illegal activities. Here are some reasons you should conduct an AML check:

 

1. Compliance with Regulations 

Failure to conduct proper AML checks can lead to legal penalties including sanctions. Regulatory organizations need businesses to conduct due diligence checks within timelines. Delays can lead to failures which can harm a company’s reputation and result in losses.

 

2. Risk Management 

AML checks help businesses reduce risks. When checks are done promptly, businesses can identify suspicious activity and reduce the likelihood of fraud or criminal activity.

 

3. Customer Trust

An optimized AML check improves customer experience. Customers need fast and efficient service and delays in KYC and AML can be frustrating. An efficient verification process helps improve trust and strengthens relationships with customers.

 

Conclusion

How long an AML check takes depends on several factors, including the data available, how automated the systems are and the complexity of the client. AML checks are a critical aspect of the compliance process, and businesses can speed up the process through real-time verification through sophisticated means like multi-factor authentication, liveness checks and identification verification. 

Timely AML checks are important for maintaining security against financial crimes, sustaining customer satisfaction and ensuring quality regulatory compliance. For more resources on AML processes and how you can carry out these processes using automated systems, book a Youverify demo today.