There are many advantages to monitoring currencies on a real-time basis, and these benefits are not limited to gaining market data and insights. They also decrease the risk of money laundering and provide regulatory and banking partners with confidence. Let’s examine these advantages in detail. Here are some of the things to expect. You’ll gain confidence in yourself and in your business.
Reduces risk of money laundering
Various international rules have created the position of the money laundering risk officer, who oversees and files suspicious transaction reports to the national FIU. Such a position is a critical player in the implementation of anti-money laundering strategies and policies. Laundering is the procedure of concealing the source of funds by hiding them within various layers of financial transactions. It can be done through a number of methods, including the disguise of ownership and the trail of illicit funds. Integrating laundered funds with legitimate transactions is another common method.
Moreover, money laundering can be conducted through a variety of corporate vehicles, such as public limited companies, private investment companies, and trusts that do not trade shares. These corporate vehicles have a high risk of money laundering because they may not be transparent enough to reveal the ultimate beneficial owner. This is why currency monitoring on a real-time basis is essential. Money laundering operations take place in different parts of the world.
One of the common ways of money laundering is through the use of cashier’s checks, which are issued by banks and are payable in cash on presentation. However, the cashier’s check often resides in a different jurisdiction. Moreover, some criminals use cash collateralized loans to move their money into a non-cash economy. The collection account is also a popular method of money laundering, in which immigrants deposit small amounts of their country’s currency. These funds are then transferred to a local account in the country of origin.
Gives regulators and banking partners’ confidence
Central banks can provide a level playing field by regulating private PSPs while also providing access to real-time data. Ultimately, this will give banks and regulators more confidence that they can monitor currencies in real-time, which is essential for innovation. Providing access to real-time data also allows banks to implement additional measures and safeguards. The central bank can monitor currencies in real-time, which gives banks and regulators the assurance that they are not overly risky.
A two-tiered model is the most promising approach, allowing central banks to provide a foundation for a payment system and leave consumer-facing tasks to the private sector. This would allow commercial banks to retain the vital role of intermediation while providing the security and privacy consumers expect from a payment system. This design solution also provides options for sound data governance while offering high privacy standards.
