Compliance officers and teams at financial institutions should be concerned that Open Banking may render their existing AML/CTF and KYC compliance processes ineffective.
An ecosystem of third-party suppliers is forming around Open Banking (TPPs).
These organizations use any way to access data or transactional functions from regulated Open Banking APIs to unmonitored screen scraping to interact with FIs' systems.
Customers can take advantage of additional services like personal budgeting and expenditure notifications, as well as personal cash transfers and cryptocurrency wallets.
TPPs can hinder a FI's visibility into how funds flow in and out of its systems, as well as via the ecosystem, according to AML specialists.
Traditionally, AML compliance has not concentrated on monitoring this type of network.
AML/CTF compliance systems should be assessed to see if they can handle the unique dangers that Open Banking poses.
When reviewing AML/CTF compliance processes for Open Banking, compliance managers should consider the following eight risks:
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