Hawex: KYC & AML in the Financial Technology Industry

Financial services in a non-face-to-face format are actively being integrated into our lives and, like any new phenomenon, are introducing new concepts and terms. The idea that KYC and AML are identical phenomena is a common misconception of the users who encounter the misuse of the terms now and then.

Roman Nekrutenko, CEO of the fintech company Hawex, tells us the key points of the KYC and AML procedures in his company.

KYC and AML — regulation in the financial market

Indeed, KYC and AML are often used together as part of countering criminal financial fraud and inspecting businesses, but these procedures are not interchangeable.

The difference between KYC and AML becomes clear if you learn what their abbreviations stand for. In the context of the financial market, the KYC procedure means "Know Your Customer", and the principle of AML (Anti-Money Laundering) is a whole complex of regulatory operations and methods to prevent the laundering of funds obtained illegally.

Therefore, conducting KYC in Hawex allows us to say with high probability that we know the real identities of our clients, and compliance with AML in Hawex helps to detect unreliable financial transactions and significantly reduce the likelihood of illegal funds entering the legal economy.

Hawex KYC: why is it necessary to "know your customer"?

Have you ever taken a selfie and a photo of your identification document when registering on financial services? If the registration was successful, you were identified by the document and verified by the actual selfie, and thus you successfully passed the KYC procedure.

This initial verification and proof of identity are necessary for any financial service provider, including Hawex. To reduce the likelihood of situations when third parties seek to use the company's services by appropriating a photo of someone else's identification document, or persons included in criminal lists.

In the absence of KYC, a fraudster can access the services of a financial institution under a false name and use them to conduct transactions anonymously. This is at best. At worst, they may be involved in international lists of financial sanctions and use the software of a financial organization for criminal activity. In addition, they can do fraud on behalf of someone else, which will entail a lot of problems for this person, thus you will not have any doubts about the need for KYC in Hawex.

Accordingly, KYC refers to AML as a particular to the general: identification and verification of the identity of a potentially new counterparty is only one of the primary stages of the multi-stage AML system.

For Hawex, as for any financial service provider, the client or counterparty is deprived of anonymity through KYC. There is also a psychological aspect to the procedure — the desire to remain anonymous is one of the alarming signs about the client's unreliability. After all, in the case of the legality of income and compliance with the law, a person would not want to conceal their identity when contacting Hawex.

Hawex AML. Combating Financial Crimes

As part of the fight against financial crimes, Hawex fulfills the list of AML requirements, which are imposed on all participants of the financial market, in accordance with the necessary AML laws, recommendations, regulations and guidelines of regulators.

Hawex uses internal control systems and customer due diligence to timely detect individuals who have decided to use the company's services for their illegal purposes. Despite the specific meaning of AML as a fight against criminally acquired funds, it has become the norm in the financial market to mean by this abbreviation a whole range of preventive methods to combat various financial crimes, including sanctions evasion and terrorist financing.

Any entity which is the subject of AML requirements faces the high cost of their qualitative compliance and the need to systematically modernize their approaches to work. This is natural, because fraudsters are constantly developing their methods of conducting criminal activity in order to circumvent the protection mechanisms. Financial entities need to strictly comply with KYC and AML in order to reduce the likelihood of using criminally acquired funds in the legal economy.

That is why only internationally recognized providers are used to implement Hawex AML procedures. It is important that Hawex is attentive not only to technological tools, but also to hiring its specialists in order to competently comply with all AML requirements. Hawex employs AML-certified specialists who are current members of ACAMS (Association of Certified Anti-Money Laundering Specialists). These employees keep others informed about trends in the financial world and they are aware of all necessary differences in the laws of international jurisdictions.

Hawex in a dynamic market

I will assume that in the average user’s view, financial entities are rarely associated with crime fighters. At least, their primary goal is to gain competitive advantage in the market and maximize profits for their shareholders. But I want to emphasize that any financial institution must allocate significant resources to meet the requirements of AML, and Hawex strictly complies with it, said Roman Nekrutenko, CEO of the fintech company Hawex.

Competent Hawex AML specialists carry out regular training for the company's personnel in order to promptly inform employees about significant changes in legislation, as well as the latest trends, technologies and the internal control system in the field of AML.

The training is conducted not only with the staff of employees who directly work in AML, but also with the "first line of defense" — account managers. It is essential because proper awareness at the stage of the first and consecutive interactions should be in place at the stage of checking a potential client. Hawex follows all trends in international legislation and best practices of financial organizations for appropriate compliance with AML procedures. To minimize inconsistencies during work, Hawex, even during AML procedures, refers to The Four Eyes principle, according to which each stage of work should be validated by several employees.

Motivating employees to competently comply with Hawex KYC and AML requirements is an important component of the well-coordinated work of the Hawex staff. We develop a culture of compliance with high standards in our activities and in the activities of our employees. Thus, Hawex regularly undergoes an external audit of the internal control system, which is aimed at identifying any inconsistencies, including those on the part of the company's employees. In case of detection of such inconsistencies, Hawex develops a change plan  according to the auditors’ conclusion and implements it as soon as possible.

Thus, Hawex not only follows all legal requirements, but also strives for the timely integration of the latest technologies in the field of AML/CTF. Hawex's interest, attention and compliance with dynamic transformations in the field of AML is the key to adequate implementation of all stages of the policy and procedures in order to maintain the company's competitiveness in the market and prevent criminal activities that can harm people and businesses.

Hawex Group Ltd

https://hawex.com

info@hawex.io

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