Essential AML Framework for Payment Businesses
Users provide two distinct means of verification in dependent representation of the particular payment system or transaction in need of authentication. The payment gateways implement 2FA using OTPs via SMS, authenticator apps (Google/Microsoft Authenticator), biometric authentication (Touch ID/Face ID), or hardware tokens (YubiKeys). This stops unauthorized configuration changes that, if executed, can jeopardize transaction security. 3D Secure 2.0 uses 2FA issuer-driven authentication on the consumer side—the bank can require either fingerprint verification or app approval for high-risk transactions. Best practice implementations combine a lack of authentication with an adaptive system, where two-factor verification may be invoked when it is determined that scores for risk were above stated thresholds relating to device identification, geography, or purchasing behavior.
Building an Effective AML Program
The risk-based methodology in AML focuses on greatest threats. Forex and casino traders do an EDD on high-value customers, including validation of source of funds. Transaction monitoring systems need to flag suspicious patterns, such as same-day deposit/withdrawal, rapid currency conversions, or dealings from high-risk jurisdictions. Payment processing integrations with AML solutions, like Worldpay’s Falcon or Fiserv’s AML Manager, make it easy for payment processors with preconfigured rule sets to maintain adherence to compliance. An annual independent audit by firms such as KPMG or Deloitte helps provide assurance to a reasonable extent that the AML program is effective. Employees should receive semi-annual training on current typologies, including “smurfing” (multiple small transactions) and trade-based money laundering. Document every investigation, even those that do not make it to SARs, so that program diligence can be established.
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