Anti-Money Laundering Checks explained: requirements, tools, and best practices for 2025
- azakaw
- 1 day ago
- 6 min read
Updated: 6 hours ago
Money laundering is still a big threat to global financial systems as it enables organised crime, corruption, and terrorism.
To tackle this, governments and regulatory bodies worldwide have implemented robust Anti-Money Laundering measures, such as AML checks, that organisations must follow to stay compliant and minimise risk.
This article explores anti-money laundering checks, including what they consist of, why they’re crucial, how they’re performed, and how technology simplifies AML compliance operations while making them more efficient.
AML checks: what is it and why is it important?
Anti-Money Laundering (AML) checks refer to the procedures financial institutions and other regulated entities must implement to prevent, detect, and report money laundering activities.
These checks are essential to comply with national and international regulations, such as those set by the Financial Action Task Force (FATF), which provides global standards: the FATF Recommendations, adopted in February 2012 and regularly updated since.
Key regulatory bodies
The Financial Action Task Force (FATF) globally sets standards and issues recommendations that countries must follow.
National regulators, such as the Central Bank of the UAE (CBUAE), the Financial Conduct Authority (FCA) in the UK, and the FinCEN in the USA, enforce these rules locally.
International organisations such as the United Nations Office on Drugs and Crime (UNODC), the World Bank, and the International Monetary Fund (IMF) play significant roles in shaping the AML landscape, as they help to define and refine it.
Which businesses need to run AML checks?
Though commonly associated with banks, AML checks are a regulatory requirement for a much broader set of organisations.
The following businesses also need to run AML checks:
Investment firms,
Insurance companies,
Real estate agents,
Accountants and auditors,
Legal professionals,
Fintech companies,
Any entity involved in handling significant financial transactions.
Types of AML checks
Effective AML compliance depends on an intricate approach to identifying and intercepting suspicious financial behaviour.
Customer Due Diligence (CDD) & Enhanced Due Diligence
Customer Due Diligence (CDD) is the foundation of any AML compliance programme. It involves verifying a customer’s identity, understanding the nature of their business, and assessing their risk profile.
A risk-based approach is key - entities must tailor the level of scrutiny based on a customer’s risk level.
Standard CDD is applied to low/medium-risk customers. Enhanced Due Diligence (EDD) must be applied to high-risk customers, such as individuals or entities operating in high-risk countries or with layered, non-transparent ownership structures.
Due to the increased risk of financial crime, these customers, particularly the ones conducting high-volume transactions, are subject to stricter scrutiny, such as additional checks and ongoing monitoring to ensure regulatory compliance and uphold the integrity of the economic system.
Know Your Customer (KYC)
KYC is a fundamental component of AML compliance. It involves:
Verifying customer identity through documentation (e.g., passport, utility bill, etc.),
Understanding the nature and purpose of the business relationship,
Assessing the risk associated with each customer.
KYC is often the first step in the AML onboarding process, and it is the foundation for further due diligence. Nowadays, digital KYC software is commonly used to make this process faster and more cost-efficient.
Transaction monitoring
Transaction monitoring is the ongoing process of reviewing customer transactions to identify suspicious or unusual behaviour.
Red flags include:
Large cash deposits that are inconsistent with customer profiles,
Transactions involving high-risk jurisdictions,
Structuring or “smurfing” transactions to avoid reporting thresholds.
Modern systems often rely on automated monitoring, which uses rules and algorithms to flag potential threats in real time.
Sanctions Screening
Organisations must screen customers and transactions against official sanctions lists, such as:
OFAC (Office of Foreign Assets Control, USA),
EU Sanctions List,
UN Sanctions List.
Failing to comply can result in heavy fines and damage to the business’s reputation. Sanctions screening is typically integrated into the onboarding and ongoing monitoring processes.
PEP Screening
PEPs - Politically Exposed Persons pose a higher risk of involvement in bribery or corruption.
Screening for PEPs, their family members, and close associates is essential.
Neglecting this step can expose an organisation to significant legal and reputational risks. Even if not engaged in wrongdoing, PEPs require EDD due to the nature of their public positions.
Related content: How does the PEP screening process work?
Adverse Media Screening
Adverse Media Screening involves checking for negative news related to individuals or entities. This can include links to criminal investigations, fraud, corruption, or other integrity-related risks.
Automated tools can help scan a broad range of public sources to detect such risks early in the process.
Suspicious Activity Reporting
If suspicious behaviour is detected during an AML check, a Suspicious Activity Report (SAR) must be filed with the appropriate authority, such as the UAE Financial Intelligence Unit (FIU) in the UAE, the FCA in the UK, and the FinCEN in the USA.
Reporting suspicious behaviour on time is essential for alerting regulators to potential financial crimes.
The role of technology in AML Compliance
As regulatory requirements grow in complexity, traditional manual processes struggle to keep up.
Technology has become a key enabler in ensuring AML compliance is both effective and scalable, reducing human error, speeding up verification, and enabling proactive risk management.
Automation of AML processes
AML compliance can be complex and time-consuming. Leveraging technology not only reduces costs but also enhances accuracy and scalability.
Modern solutions like Digital KYC software streamline the onboarding process, ensuring fast and secure identity verification.
Additionally, a robust transaction monitoring system for AML automates the detection of suspicious activities and supports regulatory reporting with greater precision.
AI and machine learning in AML
Artificial intelligence (AI) and machine learning can analyse large datasets to detect unusual patterns that might indicate money laundering.
These tools use past data to recognise patterns and adjust to new threats, helping businesses stay ahead in managing risk.
Case studies from leading banks and fintechs demonstrate the effectiveness of AI in reducing false positives, prioritising alerts, and improving overall efficiency.
Data analytics for risk management
Data analytics is crucial for identifying patterns and understanding risk.
By bringing together customer data, transaction history, government watchlists, and external sources like World-Check AML, a database of high-risk individuals and organisations, companies can build more accurate and detailed risk profiles.
Best practices for maintaining robust AML Compliance frameworks
Developing a comprehensive and well-defined AML policy is fundamental for maintaining a strong AML compliance programme. It should include:
Clear roles and responsibilities,
Risk assessment methodologies,
CDD and EDD procedures,
Reporting and escalation processes.
Policies must be reviewed regularly to reflect changes in regulation as well as new threats, including cybercrime, geopolitical instability, or new laundering schemes.
Training and awareness programmes
Compliance is everyone’s responsibility. Ongoing training helps employees stay updated on the latest AML and KYC guidelines, reinforces procedures, and fosters a culture of compliance.
Best practices include:
Role-specific training,
Scenario-based learning,
Annual refresher courses.
Regular audits and assessments
Periodic internal and external audits are essential to test the effectiveness of AML measures. This includes:
Reviewing sample transactions,
Assessing the accuracy of risk ratings,
Evaluating the responsiveness to red flags.
Insights from audits should drive continuous optimisation of both processes and technology.
FAQs
What are the AML check requirements?
AML check requirements include customer identification, KYC and AML compliance procedures, CDD/EDD, sanctions and PEP screening, transaction monitoring, and Suspicious Activity Report (SAR) filing when applicable.
How long does an AML check take?
Depending on the complexity and tools used, a basic check can take a few minutes to a few hours. Enhanced checks for high-risk customers can take several days.
How much does an AML check cost?
Costs vary by type and method of check, provider, and scale.
Individual digital and online AML checks can go as low as €2.65 to €5.30 per individual check (usually, entities offer bulk deals: the higher the volume, the lower the cost per check).
Using AML software significantly reduces costs at scale, especially for automated onboarding processes.
Higher-end individual checks can cost around €7.50 to €9.50 per individual check.
Comprehensive AML checks (e.g., for banks or fintechs) can cost over €100,000 in total, depending on the size of the company and the necessary procedures.
Are AML checks a legal requirement?
Yes. AML checks are mandatory for all regulated entities under international regulations. Non-compliance can lead to fines, sanctions, or criminal liability.
How long is an AML check valid for?
AML checks are typically valid until a significant change in the customer’s circumstances or risk profile occurs. The best practice here is to review high-risk accounts annually, and other kinds of accounts every one to three years.
How long do money laundering checks take when buying a house?
AML checks can take from 24 hours to several days, depending on the case's complexity and whether additional documents are required.
Who needs to do AML checks?
Any individual or organisation dealing with financial transactions, including banks, estate agents, legal professionals, accountants, and fintech companies, must perform AML checks as part of their compliance obligations.
Key takeaways
AML checks are not just a regulatory obligation - they are a critical tool for protecting the integrity of the financial system.
As money laundering techniques become more sophisticated, the systems designed to detect and prevent them must also evolve. Leveraging technology like AI, data analytics, and automated monitoring systems can help organisations stay compliant while minimising costs and complexity.
For businesses looking to scale with confidence, investing in robust AML and KYC compliance frameworks isn’t optional - it’s essential.
The evolving landscape of AML regulation demands continuous improvement, and now is the time to build processes that are as dynamic as the risks they aim to counter.
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