KYC & AML in the Financial Technology industry – Cryptopolitan

No doubt, one of the main problems of online financial services for users is security. Everyone wants to be sure that their assets will not be robbed or blocked, and transactions will be completed without any problems. 

That is why companies with developed AML and KYC complexes deserve great customer trust. It has become one of the criteria of success in the market. Despite the importance of these measures, many people still confuse these concepts. In order to understand the fundamental difference between AML and KYC, we talked to Romans Nekrutenko, CEO of the fintech company Hawex, and he told us how exactly the company implements these measures in its activities.

KYC and AML — foundations of online transaction security

To understand the fundamental difference between AML and KYC, we will consider what these concepts include. The term AML (Anti-Money Laundering) includes the principles of countering the legalization of illegal funds, the financing of terrorism, evasion of sanctions and other financial crimes. The list of AML requirements is determined by the regulator and local legislation, but there are also generally accepted international standards, recommendations and guidelines.

In turn, KYC (Know Your Customer) is a set of measures for user identification and verification. As a rule, individual clients are asked to take a selfie with a passport or other identity document. Verification of legal entities includes a more thorough analysis of the company’s documents, its licenses and business reputation. Also, when conducting KYC, the risk of the client’s presence in the sanctions or other unwanted lists, for example, the list of terrorists, can be eliminated. Therefore, the desire to remain anonymous becomes a reason for closer checks of AML employees.

Thus, the KYC procedure is only one of the first stages of the AML set of measures, which is necessarily carried out in all financial organizations. The complex itself may differ from company to company. They create their own AML policies based on the requirements of local legislation. But several things remain unchanged — it is mandatory for the companies to implement these measures and it is necessary for the regulators to control them.

The main principles of the Hawex AML and KYC complex implementation

Hawex has been working in the fintech market for several years, attracting its customers with advanced product functionality and a user-friendly interface. The company bears great responsibility for the security of storage, processing and withdrawal of users’ funds, therefore, high quality compliance with the AML set of measures and KYC execution are priorities for Hawex employees.

Maintaining an effective AML system is an expensive process that requires flexibility and constant modernization of methods. To do this, Hawex uses software from internationally recognized technical providers, constantly updating the list of tools used. The Hawex AML team consists exclusively of certified specialists — active members of ACAMS (Association of Certified Anti-Money Laundering Specialists). Thus, the Hawex AML staff is aware of all changes in regulation, takes into account differences in the laws of different countries, which, in turn, allows them to build and maintain a reliable internal control system.

Much attention is paid to regular training of personnel, including account managers who do not work with AML directly. According to Hawex, it is extremely important that an employee checks a potential user at the initial stage of communication. In addition, real cases from the practice of existing financial organizations are analyzed by the staff in order to clarify the interpretation of certain regulations.

Hawex employees are well aware of the importance of the measures taken to combat money laundering and counter financial crimes. The well-coordinated work of the team and the culture of compliance with high standards in the implementation of the AML and KYC complex helps Hawex to successfully pass a regular external audit of the internal control system. If any inconsistencies are found, the company promptly implements a plan to change the current procedures in accordance with the auditors’ recommendations. Moreover, in order to minimize such inconsistencies, Hawex uses The Four Eyes principle, when the stages of work are validated by several employees.

Thus, a thorough approach to the implementation of Hawex AML and KYC measures, as well as the introduction of new developments have become key in shaping the security of operations. The Hawex team is fully involved and interested in following the necessary measures, thanks to which the company remains the strongest competitor in the fintech market.