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Roman Tereshchenko : How to prevent fraud, money laundering, and illegal financial transactions

In 2023, a huge amount of illegal funds flowed through the global financial system. Their sum reached the mark of 3.1 trillion dollars. These funds, according to financial analyst Roman Tereshchenko, are associated with human trafficking ($346.7 billion), drug trafficking ($782.9 billion), and terrorist financing ($11.5 billion). Additionally, the total turnover from financial fraud was a staggering $485.6 billion. These figures highlight the need for tougher measures to combat financial crime. This is where the importance of effective AML (Anti-Money Laundering) and KYC (Know Your Customer) procedures to ensure the security of financial systems comes to the fore.

Roman Tereshchenko: how do financial institutions resist the actions of fraudsters?

One type of financial crime is money laundering. This process is an illegal scheme whereby significant amounts of money generated from criminal activities (drug trafficking or terrorist financing) are disguised as legitimate funds. Money from crime is considered “dirty” and the laundering process is aimed at making it look like clean money. To detect and prevent such activity and other types of fraud, financial institutions implement anti-money laundering (AML) policies.

Recently, governments around the world have stepped up their efforts to combat money laundering and other illegal financial transactions. As Roman Tereshchenko reports, most states have introduced legislation for this purpose that obliges financial institutions to establish procedures for monitoring and detecting suspicious activity. The expert focuses on the fact that there are several key methods for countering fraud involving funds. He suggests taking a closer look at each of them.

Adhere to AML policy

Implementing an AML compliance policy becomes an important step to strengthen the fight against money laundering in any organization. Financial institutions are actively implementing AML policies to curb the flow of proceeds from illegal transactions. The steps and procedures that are put in place to combat financial crime should be clearly defined within this policy and available to all staff.

Maintain KYC process priorities

  • Verifying the client’s identity.

“This stage is the priority and main one in the KYC process,” says Roman Tereshchenko. – The client’s identity is verified upon registration, making this step the first defense against illegal financial transactions. A high-quality KYC system is essential to reliably authenticate customer information and determine whether they are who they say they are.

  • Using various verification methods.As part of the KYC process, a variety of methods are widely used, including verification of identity documents, as well as the use of fingerprint and facial recognition software, and analysis of financial statements. According to the analyst, the variety of methods allows for more reliable verification of customer data.
  • Optimization of procedures. Continuously optimizing customer verification processes is essential to complying with regulations and identifying suspicious accounts. This includes process improvement and automation, leading to more efficient and accurate KYC execution.

Consider key patterns and methods for monitoring transactions

Detecting suspicious patterns is a key aspect of the fight against financial crime. One effective method is to monitor transaction patterns.

Among the signs to watch out for, Roman Tereshchenko identifies transactions to offshore accounts, repeated transfers of small amounts into the same account, and transfers of funds to risky or sanctioned jurisdictions. These anomalies may indicate potentially illegal activity and require further investigation.

The financial analyst advises paying special attention to politically exposed persons and those under sanctions. Monitoring systems will help with this, allowing you to analyze data and identify suspicious patterns, as well as build customer models for effective investigation of any questionable transactions.

Roman Tereshchenko: benefits of using Regtech technologies to combat financial crimes

– With the development of digital technologies, illegal financial transactions are becoming more complex and large-scale. Data leaks, cyber-attacks, and money laundering have become commonplace in the world of online finance. But thanks to Regtech, companies can now quickly detect and stop such criminal activities even where traditional methods may be ineffective, comments Roman Tereshchenko.

Financial analyst recognizes that Regtech solutions make it possible to effectively control activities in the online environment, where new forms of illegal schemes are developing. As a result, the use of such modern technologies becomes a necessity for financial institutions in combating the threats of the digital world. They provide security and reliability in a rapidly changing financial environment.

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