Blog post by Andis K, Head of AML at PayPugs
Some businesses will go out of their way to avoid being absolutely truthful to their banking institution. Even companies who are operating legally still have an impulse not to be transparent. It is too bad, as it seems to me that companies should be able to trust their banker.
I have first-hand experience of such cases consulting for many years in Europe for a number of banks, before I started in my current role as Head of AML at PayPugs. 10 – 15 years ago people knew about money laundering and terrorism funding, but not much was done in the line of mitigating these activities.
In my previous roles, I attended many courses and workshops to learn all of the intricacies of the Anti-Money Laundering (AML) processes and the Know Your Client (KYC) checks. I found it quite astonishing to see how scores of companies were making it their aim to break the law and not to follow these rules.
Some businesses, of course are not laundering money or funding terrorism operations, but they certainly are avoiding taxes which in itself is fraudulent. When a company makes the decision not to be transparent in this way, they put themselves at risk for serving jail time, and they put their business on the line, as well as the employees they are responsible for.
AML and KYC processes
People’s hesitation and downright objection to AML and KYC checks can stem from bad experiences, myths and misconceptions that it’s a laborious process. But it is paramount to adhere to these guidelines to ensure the safety of their business and society as a whole.
At PayPugs, because we are smaller, have a flexible approach and highly skilled staff in the areas of banking and finance, we are able to perform these AML and KYC checks with ease.
And, because of our personal approach, we are laser focussed on any red flags that may arise. Highly trained to seek out discrepancies, the team at PayPugs are committed to thorough AML and KYC checks.
A high-risk business is classified as being part of an industry or sector that attracts commercial disputes and/or carries legal restrictions. Some of the risks are not obvious, for instance logistics is high risk, because we do not know where customers and end users are getting goods from or sending them to, and there could be for example a violation of sanctions.
Certain online retailers are also classified as high risk due to the value of the items for sale. These retailers are not checking that money trail, and as such are not always privy to where the funding comes from.
Cryptocurrency is also a facet of banking that requires compliance, as it is challenging to pinpoint the source of funds and therefore the legality of it. But daily there are solutions and technology that aid in the process or tracking, from start right up to the moment it is converted to fiat currency. There is still a gap in the understanding of banks and financial institutions of the challenges and the opportunities that crypto presents.
My advice for businesses looking to stay compliant or who find themselves classified as high risk is to ask their financial institution for their license (there are fraudulent financial institutions too, you know) and to always be transparent and honest with them. If you don’t have that trust with your banker, what are you doing there?
PayPugs have a two-step onboarding process, which includes AML and KYC checks. While we can’t always be sure of all the documentation needed ahead of the time, as it differs from case to case, there is a knowledgeable onboarding specialist with you every step of the way.
We’ve helped many individuals and businesses in medium to high-risk industries stay compliant with ease. You’re not just a number to us; you’ve got a financial partner, one that wants the best for you, for life.