How do companies make sure that their workers are credible? This is very important in finance, where one needs only to employ people known to deal carefully and honestly with money.
Part of the onboarding process into any company includes independent AML background checks for potential new hires. But what exactly is an AML background check?
As for legal requirements, the applicant has to be very careful while performing its activities mainly in banking, accounting and other financial sectors. You will need to make sure that any new man or woman that you hire to work in your company will be able to protect customer private information from being disclosed to anyone and that he or she operates within the full understanding of the laws regarding the protection of such information.
One such important step in that assessment has to do with an AML check, otherwise designated as anti-money laundering. It could prove complicated to execute if you have never done that before.
This article discusses how to do adequate AML background checks when onboarding someone new onto your finance team.
Why AML Background Checks?
Any company engaged in finances of any kind needs to conduct AML background checks for potential new hires.
AML stands for anti-money laundering, and such checks help scan any criminal record checks, red flags from previous employments, or any other matter of contention in the background of a person that could reflect compliance risks.
Conducting AML background screening at the front end, right at the hiring stage, thus enables firms to identify red flags and have only those with clean background checks recruited on board for sensitive financial tasks.
This due diligence at the forefront helps protect both the organization and its customers. By 2023, the global AML software market rocket to $2.7 billion as spending on compliance tools grows.
How to Build an Effective AML Background Check Program?
To thoroughly vet a new applicant, a financial institution shall be armed with an AML background check program. This includes a screening vendor conducting criminal background checks, as well as employment verification and other compliance-related verifications, on prospective applicants.
Policies are equally crucial in defining specifically what would constitute a disqualifying factor for one or the other based on the results of the check. Having your AML background check described in advance empowers you to conduct rapid and uniform checks against all potential hires.
Bonus: To learn more about setting up an effective AML compliance program, visit our website amlwatcher.com.
Spotting Red Flags in the Application Phase
You can look out for possible red flags even before conducting formal AML background checks at the very beginning of your process, during the job application phase.
Possible inconsistencies or periods of unemployment will show up when one carefully reviews resumes submitted by the applicant and asks questions about the jobs held by the candidate. Additionally, requesting the candidates to disclose any criminal convictions at the outset fully will allow any issues to arise early on in the cycle.
Collection of Relevant Personal Information
What would you need to conduct an appropriate AML background screening? Adequate criminal record checks, as well as employee background checks, require gathering a few pieces of important information from applicants for using this information within AML background screening.
With accurate identifying information, your background check provider will be better able to conduct public record searches and verify prior employment.
In 2023, 98% of the financial institutions surveyed indicated that they use an automated system to capture and also verify applicant information, like legal names, previous names, addresses, dates of birth, and Social Security numbers.
Conduct Criminal Record Checks
What kinds of criminal records would make a person ineligible to work in the finance industry? Criminal record checks within the AML background screening should also involve checking the federal and county court records to determine past convictions for legal money related crimes that may lead to compliance risks.
Other misdemeanour convictions may be cause for avoidance, too, depending on your company’s policy. An AML background screening is necessary for running thorough criminal record checks to ensure that only law-abiding people join your employer.
By 2023, over 95 percent of financial companies will run complete checks, including federal and county court records.
Verify Education and Employment History
In the AML background screening, regarding employment verification, one is not only limited to having a view from the human resource department but calls former supervisors and colleagues to have a more comprehensive background.
You would then cross-check the information provided, including employers, dates of employment, positions held, and reasons for leaving. The inconsistencies or unexplained gaps may act as red flags that raise the need for further review.
Attention to education and employment verification will guarantee that the candidate’s qualifications and experience are real.
Conduct Financial Checks and Credit Reports
What kind of issues may pop up from financial checks and credit reports in employee background checks? In AML compliance, checking how an applicant manages their finances is always safe.
By conducting a credit report or verifying data on credit, there may be issues related to write-offs, liens, judgments, or bankruptcies pointing to careless spending habits.
Once you’ve nailed the onboarding process, make sure employee training and monitoring are in place, of course. Review our resources on annual AML refresher courses here.