Why AML, keeping it affordable and how to get microfinance AML compliant in Southern Africa with world-class sanction screening in 3 simple steps
Greylisting, mandatory regulation and AML compliance. If you’re in microfinance in Southern Africa, you’ll be aware that regulators now require all microfinance providers to become AML compliant.
But it needn’t be expensive or a threat to your business.
Here’s why it’s important, keeping it affordable and how to get microfinance AML compliant in Southern Africa in 3 simple steps.
What is AML and Why do Microfinancers Need to be AML Compliant?
Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) started when international investigations showed that criminal organisations and terrorists use our perfectly legal financial systems to fund terrorism and criminal activities.
To help ensure peace and protect the global financial system, governments convened and decided to put regulatory frameworks in place to get every country in the world to practice AML. See why we need microfinance AML.
It appointed the Financial Action Task Force (FATF) as the watchdog that checks if countries are compliant; penalises countries that aren’t – using the “grey list”, a form of financial sanctions against a country –; and helps them become AML compliant.
That’s what happened when FATF greylisted Namibia and South Africa recently, as well as Zimbabwe and Zambia in the past. They assessed the countries’ AML security and found it lacking.
Greylisting is a warning to the country that it will be sanctioned if it doesn’t become AML compliant. And, naturally, under threat of sanctions, every country wants to get off the greylist as soon as possible.
To be removed from the greylist and stay off the greylist for good, countries must ensure that all the financial service providers operating inside that country become AML compliant.
And microfinance is seen as a financial service. Therefore, every Southern African country is creating and enforcing regulations to get companies in microfinance to become AML compliant.
See all about AML compliance, as well as why we need microfinance AML and all about micro-credit AML.
Which Regions Require Microfinance AML Compliance?
If you are in microfinance in any of these countries:
Then you are legally required to be AML compliant. To become compliant, you need to perform Sanction Screening.
See the business benefits of sanction screening.
But it’s not always that easy if you’re in microfinance…
Possible Problems/Barriers to Microfinance AML Compliance
High Cost of Sanction Screening Tools:
One of the major challenges microfinance faces in achieving AML compliance is the high cost associated with acquiring and maintaining sanction screening tools. Sanction screening is a vital part of AML compliance.
However, the screening comes at a cost. And, while most big businesses have large enough customer bases and margins to absorb costs or risk just passing the cost onto the consumer, microfinance deals with a very price-sensitive consumer, and so needs to be more mindful of their costs, to stay competitive.
The Need to Keep Premiums Low:
Companies in microfinance often operate on tight budgets and aim to keep their premiums and operational costs as low as possible. Investing in AML compliance tools and processes can strain their financial resources, making it challenging to strike a balance between regulatory compliance and cost efficiency.
See our post on balancing cost versus AML compliance.
The Solution: More Affordable Sanction Screening for Microfinance in Southern Africa
ZenDetect understands the unique margin challenges that companies in microfinance face when it comes to AML compliance. We are a locally (African) built tool designed to offer competitive pricing in the AML space. By opting for ZenDetect, microfinance companies can save up to 98% on their sanction list screening.
How to Get Microfinance AML Compliant through ZenDetect Today
STEP 1: Book a Demo with us and we'll show you how ZenDetect operates, discuss technical details, and explain integration with your admin systems.
STEP 2: Our team will assist your developer in integrating ZenDetect, or help you find a developer for this purpose.
STEP 3: As soon as it’s set up, you can bulk upload your database and screening begins immediately – the system will continuously and automatically screen, and you’ll be notified whenever the Sanction Lists are updated or if a flag requires your attention.
With ZenDetect, you get:
- Integration: ZenDetect offers seamless integration with your existing systems, making it easy to incorporate AML screening into your daily operations.
- Sanction Screening: Use ZenDetect's robust tools to screen your customers, vendors, and partners against global sanctions lists, ensuring that you are not involved in any illicit transactions.
- Continuous Monitoring: ZenDetect offers continuous monitoring services to keep you updated on any changes in sanctions lists or potential risks, ensuring ongoing compliance.
Learn more about our unique and affordable sanction screening for your business’s AML compliance, the benefits of getting compliant and how to conduct sanction screening in our post on how to get sanction screening in Africa.
