{"id":2546,"date":"2016-11-02T23:46:31","date_gmt":"2016-11-02T23:46:31","guid":{"rendered":"http:\/\/paymentfac.wpengine.com\/?p=2546"},"modified":"2021-06-17T13:26:09","modified_gmt":"2021-06-17T13:26:09","slug":"4-things-pfs-need-to-know-about-anti-money-laundering","status":"publish","type":"post","link":"http:\/\/infinicept.com\/payment-facilitator\/archive\/4-things-pfs-need-to-know-about-anti-money-laundering\/","title":{"rendered":"4 Things PFs Need to Know About Anti-Money Laundering"},"content":{"rendered":"

Government regulations laid out by the Bank Secrecy Act and the USA PATRIOT Act require businesses to follow certain practices to avoid facilitating criminal activity, even inadvertently. Together, these regulations form the backbone of anti-money laundering efforts in the U.S.<\/strong><\/p>\n

These government regulations are supported by card brand rules that provide direction on payment facilitators\u2019 specific roles and responsibilities. This is an area that can be daunting to many new and even seasoned payment facilitators.<\/strong><\/p>\n

Dr. Heather Mark, Ph.D., director of compliance for ProPay, shared four critical AML practices the payment facilitators she meets do not always fully understand.<\/strong><\/p>\n

Onboarding. <\/strong>Payment facilitators exist in part to ease entry into the payments system for small and micro-merchants, for whom the process of signing up with a traditional payment processor can be difficult and\/or costly. However, there are some steps to that traditional process that cannot be skipped.<\/p>\n

\u201cIf we look at the genesis of payment facilitators, the goal is to lower barriers to get into a particular market or a particular industry. If we look at the goal of money laundering, it\u2019s typically to find low barriers to get into,\u201d Mark said.<\/p>\n

That\u2019s why, when onboarding merchants, payment facilitators must perform the full underwriting needed to verify that their customers are who they say they are, and that they are not sanctioned by the Office of Foreign Asset Control (OFAC) for ties to crime or terrorism. \u201cKnow Your Customer\u201d practices and OFAC screening are critical practices that PFs cannot skip or shortcut.<\/p>\n

Monitoring.<\/strong> Once the merchants are onboarded, the work isn\u2019t over, Mark said. Payment facilitators are responsible to implement systems they can use to monitor their merchants\u2019 transaction activity to watch for suspicious behavior and report it if needed.<\/p>\n

\u201cYou may see something that doesn\u2019t look right because you understand your merchant demographic. For example, you\u2019ve got a merchant that\u2019s doing pretty steady business, then all of a sudden they\u2019re spiking, they\u2019re up 200% over these three days, then they\u2019re back down again. That\u2019s anomalous behavior,\u201d Mark said. \u201cSo figuring out what\u2019s at the root of that and whether it\u2019s something that is suspicious activity that merits reporting to the authorities or referral to your bank is very important.\u201d<\/p>\n

Documentation.<\/strong> So, what if a PF investigates that anomalous behavior and determine that there was a legitimate reason for it \u2013 it wasn\u2019t likely activity that merits reporting after all?<\/p>\n

\u201cCertainly you\u2019re going to be on the hook if you\u2019re willingly flouting the law,\u201d Mark said. \u201cBut in some cases, simply not taking an action is just as bad.\u201d<\/p>\n

For that reason, PFs must document not only their practices, but their criteria for making certain decisions. Proper documentation helps enable a PF\u2019s AML processes to be repeatable, consistent, and in some cases, defensible, Mark said.<\/p>\n

\u201cDocument your reasons, have your criteria, review it on a regular basis, and make sure you\u2019re adjusting it in a way that\u2019s appropriate to the risks that are evolving in your business,\u201d she said.<\/p>\n

Connection.<\/strong> The good news is, there is help out there, Mark said. Payment facilitators should look into support offered by organizations such as the Merchant Acquirers\u2019 Committee (MAC) and the Association of Certified Anti-Money Laundering Specialists (ACAMS). These groups hold conferences, develop resources, and allow opportunities for networking with other professionals that can be invaluable to businesses wishing to understand more about AML practices and current fraud trends.<\/p>\n

In addition to participating in industry groups, payment facilitators can learn about trends in criminal activity by watching for enforcement action bulletins and guidance coming from government entities such as OFAC, FinCEN, and CFPB.<\/p>\n

\u201cYou can see where different industries might be an area of focus for regulators, and that may be specifically because they\u2019re seeing a high level of activity there that\u2019s concerning to them,\u201d Mark said.<\/p>\n

It\u2019s important to keep in mind that not all AML work must be done in-house. Mark highly recommends seeking expert assistance in the form of partnerships with providers or outside counsel specializing in payments. Outside experts can advise PFs, help them define their internal processes and take on some of the tasks necessary to comply.<\/p>\n","protected":false},"excerpt":{"rendered":"

Government regulations laid out by the Bank Secrecy Act and the USA PATRIOT Act require businesses to follow certain practices to avoid facilitating criminal activity, even inadvertently. Together, these regulations form the backbone of anti-money laundering efforts in the U.S.<\/p>\n

These government regulations are supported by card brand rules that provide direction on payment facilitators\u2019 specific roles and responsibilities. This is an area that can be daunting to many new and even seasoned payment facilitators.<\/p>\n

Dr. Heather Mark, Ph.D., director of compliance for ProPay, shared four critical AML practices the payment facilitators she meets do not always fully understand.<\/p>\n","protected":false},"author":21,"featured_media":286,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[1015],"tags":[48,719,765],"class_list":["post-2546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive","tag-aml","tag-propay","tag-riskcompliance"],"acf":[],"_links":{"self":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/2546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/comments?post=2546"}],"version-history":[{"count":1,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/2546\/revisions"}],"predecessor-version":[{"id":7103,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/2546\/revisions\/7103"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/media\/286"}],"wp:attachment":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/media?parent=2546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/categories?post=2546"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/tags?post=2546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}