Benefits and Features of a Compliance Management Software


What is a Compliance Management Software?

An organization’s adherence to professional and government regulations and standards per their industry, the compliance management software helps with the automation, centralization, consolidation and streamlining processes, data and communication for above. This management software provides compliance solution strategies which helps with risk management, deployment of optimized workflow and empowerment of staff with greater information and insights regarding the compliances to avert from hefty fines or the worst, shutdown.

Irrespective of the type of the industry, the business has to adhere to regulatory government policies. Non-compliance is always detrimental as the business may suffer terribly.

To ensure that non-compliance doesn’t impact your business, one can use a compliance management software. This is a technological solution that helps you and your company become more legally competent.

Benefits of compliance management software

Benefits of Compliance Management Software:

Firstly, let’s get into the necessity of the compliances and what are their requirements. Compliance is fundamentally a legal, social, ecological, and financial compliance benchmark that aims to preserve a business’/industry’s ethics, liability and overall performance in a particular sector. It can also be defined concerning regulatory perquisites to protect employees from harassment.

The compliance officers lose their time in the search of data ensuring company’s adherence compliance. Therefore management software does the automation of the repetitive and tedious processes of gathering data, communication and knowledge sharing, decision making and staying up-to-date with the changes in compliance requirements and integrating it to the whole system. 

Therefore, why should businesses need to invest in and use compliance software?

  • Reduction in legal complications: 

As we know all businesses need to abide by social, legal, corporate, environmental, government and financial compliance and framework to operate upon which would steer the business clear of fines, penalties and lawsuits. Compliance management software ensures full implementation of the operations in the organization. Thereby preventing complications to cascade from loopholes into crisis. The administration and execution of policies to the fullest extent ensures the policies to gain power. This is one of the biggest advantages of software.

  • Efficient operations and processes:

In the spirit of prosperity and success, organizations need to aspire for transformation and advancement. Feedback solicitation and timely evaluation in the form of internal and external audits help to point out irregularities to enhance the quality of discharge of workflow. Therefore software ensures proper documentation of audits, checklists, evaluations and improvements and their communication teams, globally and globally.

  • Expedite compliant and well-informed decision-making:

In the case of irregularities in the system with the help of compliance management software, the flag can be put up. Pass it on to the delegates so they can resolve the issues immediately. In a nutshell, it helps in safeguarding the organization’s financial and legal uprightness.

  • Productive cooperation and correspondence:

In any organization or business, employees and officers are the frontlines of facing the inconsistencies and risks in the system and fulfilling the compliances. Therefore, centralization and simplification of the communication of these fallacies so that they are detected, assigned and executed efficiently. Hence, compliance management software ensures frictionless and tangible modus operandi for recording and transmit the complications and occurrences among groups of people.

Compliance Management Software

What are Popular Features of Compliance Management Software?


We have discussed the benefits of investing in compliance management software. Let’s look into the elements of features of compliance management software.

  • Easy-to-use user interface:

The software must provide a good and simplified user experience. Compliance management software must intuitively be easy to use. The software’s frontend like design finishing, layout, features and the relevance of it explains the functioning.

  • Top-notch analytics:

With the advent of industries big data, compliance management software provides methods to visualize and display trends. Before being referred to upper management, the answers to complications are available.

  • Control over documentation:

The software expedites document control which includes dedicated management of records, forms and documents that business transacts. Document controlling is a major want by ISO 9001.

  • Managing fraud:

An account of dubious activities, the software ensures reporting and resolution of anomalies regarding financial compliance and potential frauds like payments and bribes.

  • Managing processes:

In the spirit to strive for excellence, owning, managing, remapping and dissecting processes while making the management process streamlined by becoming seamless, integrated and collaborative. Visualization of modus operandi through flowchart tools and mapping is must so that everyone is on the same frequency while operations.

  • Managing incidents:

Management software should have a well-designed communication algorithm for the simplification and streamlining the process of raising the red flag of incidents and events.

  • Capacity Development:

Onboard learning is a must for compliance officers so that they are up-to-date with the compliance set by regulatory bodies and commissions.

  • Online system for compliance requirement:

The software should have a centralized system for gathering reports on compliance, new regulations and requirement changes and firm integration with the business process.

  • Reporting compliance:

Management software should be able to manufacture a line up of data extracts, compliance reports and ensure that these reports are representable as well as customizable for the management to take action. 

  • Workflow and Task management:

Time-saving, efficient resource and compliance task management for end-to-end workflow across a different point of interactions are must from a software.

  • Risk Management:

Productive management software provides methods managing, monitoring and analysis of risks throughout the stakeholder hierarchy and other key business processes.

  • Data security:

The software must provide uncompromising data security across all levels of value chain using encryption, advanced security systems, transfer of data and easy integration.

  • Offline competence:

Management software must provide options for collections and processing data being offline. Such feature empowers businesses to operate smoothly without paying much attention to their initiatives in businesses.

  • Integration competence:

The compliance management system must be capable of integrating with the third party and supporting systems for example HR, CRM, trading systems, research systems and many more. Automation provides efficiency saving time, money and resources which management software must be capable of providing more time and energy for policy formation and compliance strategy and management comprehensively.

We at PiChain, develop compliance management software. We use AI and Blockchain along with Deep Domain Expertise to ensure Sustainable Compliance Management for financial institutions.

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BMI Securities Limited breaches anti-money laundering regulatory requirements, gets severely fined by SFC.

BMI Securities Limited breaches anti-money laundering regulatory requirements, gets severely fined by SFC.

BMI Securities Limited (BMISL), a Hong Kong based financial securities investment firm, got a penalty of $3.7 million by Securities and Futures Commission (SFC). They failed to comply with the anti-money laundering (AML) and counter-terrorist financing (CFT) regulatory requirements. (#1)

BMISL’s responsible officer, SFC did suspend Ms Maggie Tang Wing Chi for five and a half months from 11th February 2020 to 25th July 2020. (#2)

The shares of two listed companies placed were subscribed through BMISL in 2016. Using the bought and sold notes in off-exchange transactions the clients transferred most of their placing shares to third parties for the substantial amounts ranging from $4.4 million to $855 million. (#3)

These transactions showed suspicious features like:

  • The shares placed were disproportionate to the subscription amount with the client’s financial profile.
  • No transactions were done in BMISL accounts. Apart from acquiring and disposing of the shares placed.

Findings by SFC are as follow:

  • Inadequate implementation of controls alleviates the risk of money laundering and terrorist financing associated with bought and sold notes via suspicious transactions.
  • No distinguishing, proper inquiry and insufficient scrutiny on suspicious dealings. No consideration for reporting them to Joint Financial Intelligence Unite where appropriate
  • Neglecting proper customer due diligence and keep customer-related information updated and relevant.
  • Absence of adequate and effective framework for identifying politically exposed persons and singling out terrorists and sanction designations.

From SFC’s point of view, BMISL’s conduct was breaching the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML guideline) and Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). (#4)

SFC’s investigation further resulted in the findings and the BMISL’s breaches because of Ms Tang’s incapability to discharge her duties as a responsible officer and as a member of BMISL’s senior management. She failed to identify, conduct appropriate inquiries and implement effective AML/CFT systems to subside the risks of money laundering and terrorist financing.

Factors in consideration so that SFC could decide sanctions against BMISL:

  • The message that AML/CFT is intolerable, is propagated in the market.
  • Tang and BMISL’s cooperation for resolving the concerns from SFC.
  • The remedial actions by BMISL to better its AML/CFT systems and controls.
  • An independent reviewer will prepare a report to log the successful rectification of identified concerns. BMISL will submit this report to SFC within twelve months.
  • BMISL’s financial situation.
  • Clean disciplinary records of BMISL and Tang with the SFC.

 Notes (#)

  1. For carrying out Type 1(transactions in securities) regulated activities, Securities and Futures Ordinance (SFO) did provide the license to BMISL.
  2. SFO provided the license to Tang for carrying out Type 1(transactions in securities) on behalf of BMISL and Type 9(asset management) regulated activities on behalf of BMI Funds Management Limited since 17th February 2016.
  3. SFC reported suspicious activities to the Joint Financial Intelligence Unit. The focus of the investigation was on the adequacy and effectiveness of BMISL’s AML/CFT systems and controls.
  4. The licensed corporations must implement appropriate internal AML/CFT policies, procedures and controls to ensure compliance with relevant regulatory and legal requirements. Every reasonable measure is undertaken to ensure proper safeguards to palliate the risks of money laundering and terrorist financing.
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KYB (Know Your Business)- All You Need to Know

KYB (Know Your Business)- All You Need to Know

Businesses that offer their services to other businesses have to be extremely careful in their customer on boarding processes. If you are a regulated entity like a Bank, Financial Institution or a Business entity from which the money are directed into bank accounts of corrupt business owners or shareholders, the question of money launderers or even terrorism financiers may land your business into danger. 

For say, The Panama Papers that have rocked the tax compliance world with 200,000 shell companies hiding billions and billions of dollars unlawfully from lawful taxation.

What is KYB (Know Your Business)?

In Simple words,  Like KYC (Know Your Customer), the process of a business verifying the identity of its clients in B2B i.e for any Business or Financial Institution with whom the host company is working is know as KYB ( Know Your Business ).

The KYC helps to safeguard the reputation of the host business , and also helps fundamentally to know your  ultimate beneficial owners (UBO) of companies you are doing business with.

 So, under the rules of KYB (Know your business) laws that require investigating the UBO structure is part of the CDD (Customer Due Diligence) process. 

Why KYB (Know Your Business) ?

KYB (know your business) practice enables organizations to determine whether they are dealing with an authentic company or just a shell company that is just present on papers.

KYB checks include AML checks for business and proper documentation. Guidelines such as 5th AML Directive from EU dictate the KYB laws to corporate entities. 

KYB Verification Process for EU (European Union) 

In the EU region to enforce a thorough KYB(Know your business) the due diligence requirements are as follows:- 

1. Identify and verify the customer’s identity based on documents, data or information obtained from a reliable and independent source.

2. Identify the Ultimate Beneficial Owner (UBO) is must and to take reasonable measures to verify that person’s identity and also to understand the ownership and control structure of the customer.

3. The purpose and nature of the business relationship needs to be assessed and information in-detail needs to be obtained.

4. Business relationship needs to monitored on an ongoing basis. This includes scrutiny of transactions to ensure that the transactions conducted are inline with the  entity’s knowledge of the customer, source of funds and risk profile. It is also necessary to ensure that the documents, data or information are kept up-to-date.

5. As per AML directive Identify the beneficial owner and take reasonable measures to verify that a person’s identity so that the obliged entity is satisfied that it knows who the beneficial owner is. 

Challenges in KYB (Know Your Business) 

Finding Beneficial ownership is often the most difficult task. Nominee shareholders can hide true ownership. Shell companies and trusts can hide information within filings. One can also hide it within different jurisdictions. 

These registrations can, in turn, be registered by other shell companies or trusts in yet other jurisdictions. The percentage of ownership is potentially hidden by complex paper trails making the identification process complex and costly. 

In some jurisdictions there are no documentation requirements for beneficial ownership thus there is no shareholder information to investigate. 

Most companies today are applying KYB (Know Your Business) processes as the same to KYC (Know Your Customer), using slow, manual-intensive and time-consuming processes. 

KYB Checks- A Nightmare for the Compliance Team 

1. Compliance teams now need to look at multiple reports and different data sets.
2. The working location and the location of the data could be different.
3. Data is often old or inaccurate.
4. Data can be in a variety of different formats that are hard to reconcile.
5. Company structures are different and can change over time, so the data is difficult to gather and difficult to interpret. 

Thus applying a traditional resource-intensive manual approach and reliance on self-certification is no longer sustainable. 

Hence in this Digital Era, Advance and Automated Compliance Products Powered by AI and driven by Block-chain allows safe, easy KYB (Know Your Business) for any Business or Financial Institution.

© 2020 PiChain Innovations Pvt. Ltd. All rights reserve

Transaction Monitoring in Anti-Money-Laundering

Transaction Monitoring in Anti-Money-Laundering

Transaction Monitoring in Anti-Money-Laundering

As the volume of transactions continues to increase and money laundering techniques become ever more sophisticated. The financial institutions face fundamental challenges on anti-money laundering (AML) in  transaction monitoring, making this an increasingly expensive task.

What is Transaction Monitoring?

In simple words, Transaction monitoring is an Anti-Money Laundering and fraud prevention security process that reviews and analyzes suspicious financial transfers or commercial transactions in digital and fiat currencies, ultimately exposing the origins.

Why Transaction Monitoring?

Companies and Financial Institution are using transaction monitoring to prevent terrorism financing, financial fraud, evasion of taxes, and other types of money laundering.
A vital part of any bank or Financial institution is to Monitor the client’s profiles and their transactions.

The AML monitoring Transactions are

1. Deposits
2. Transfers between accounts
3. Withdrawals
4. Exchanges of currency
5. Extensions of credit
6. Any monetary instrument or investment security;
7. Any other payment or transfer, etc.

Money-Laundering Alerts in Monitoring Transactions

1. Monitoring of cash deposits,
2. Withdrawals, wire transfers that exceed statistical thresholds
3. Complete assessment of money transaction history of the Customer
4. Blacklist screenings
5. Sanctions screening
6. High-risk transaction regulation and exposure.

The 5 Real-time Indicators of Transaction Monitoring in AML

1.Suspicious Activity Report

This is the final result of an investigation, and broadly indicates the meeting of overall Transaction monitoring system objective related to the suspicious activity. There is a need to make sure the Case categorization along with other details is represented to provide to the investigation.

2.Quantum of False Positives

a well-performing transaction monitoring system makes sure that the number of false positives is greatly reduced which accounts for about 87%.

3.Changes in Regulations

Understanding changes will drive investigative activities. current transaction monitoring systems are oblivious to the current regulatory changes which need to missing of suspicious transactions. a robust transaction monitoring will have the changes in the regulations incorporated so that suspicious transactions are tracked in real-time

4.Different Monitoring scenarios

Lack of proper customer and account segmentation, new products will need to more scenarios to be created. Transaction monitoring systems have to be well aware of the above to make a difference in the operations.

5.Operational costs

Cost related to the Operations teams used to complete investigations and systems tasks needs to be taken into account along with the system infrastructure to support the transaction monitoring system.

© 2020 PiChain Innovations Pvt. Ltd. All rights reserve

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