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Compliance is a must in remittance industry

Business, particularly in financial services that grip the management and transfer of money across international borders, requires a careful monitoring control. The regulatory environment has been more stringent due to the rise of cybercrime and little more financial crisis. Banks and other financial industries when started coming through money transfer business, matured compliance models.

Compliance in business refers to the company following all of the legal laws and regulations in regards to how they manage the business, their staff, and their treatment towards their consumers. In fact, the concept of compliance is to make sure that corporations act responsibly. There are many new players and the remittance landscape is now far more diverse and competitive. Money transfer operators have developed quickly thanks to digital technology and are reaching more parts of the world with a wide variety of new services that are fast and convenient. And with the growth of these services comes the fundamental requirement to be safe and secure.

Remittance volumes are rising every year and more corridors are being connected through sophisticated networks developed by today’s global money transfer operators and so compliance is a top priority for the remittance industry. Each and every company is the subject to local, national and international regulations. If the remitter is a money transfer operator or a bank, it is bound by long-standing due diligence and compliance obligations, that means the remitters must be licensed, otherwise they will be deemed underground and outside the law.

It is an entirely good thing that transfer infrastructures and remittance flows are being transformed by digital technology and mobile money. It means more people worldwide now have access to versatile and cost-effective remittances. But new technologies and practices bring vulnerabilities as well as opportunities, so compliance must match the pace of change.

Since the compliance means the greater customer service, without regulation there would be no accountability to ensure money moves safely and securely from sender to receiver or to identify and block transactions that are not legitimate. So with the right compliance kit and a good compliance auditing department, a company can achieve all of the productive benefits and work towards better market performance. Nowadays transactions have become highly digital, regulations like know your customer (KYC), anti money laundering or other crimes are easy to be happened. Even in mobile app if the transactions happen, compliance is also required in this regard.

While technology has added to the complexity and demands of compliance, it also offers very effective solutions for compliance. The technological advances powering the remittance industry are also driving big advances in visibility and security. The industry is embracing compliance technologies such as automated identification, real-time transaction scanning, data analytics, data enrichment, and artificial intelligence. Collectively, these and other digital developments provide a more complete understanding of transaction flows and counterparties, which is vital as transfer pathways grow in reach, scope and complexity.

Most importantly, online remitters don’t meet clients in person, and mobile money is spreading worldwide, KYC is a very important compliance issue. One solution is biometrics, which is growing in popularity as a reliable and frictionless method of verification for financial services. Biometric methods, such as fingerprint IDs stored on phones, are helping to authenticate transaction parties and reduce fraud. This is just one example of how technology can set the rules as well as provide the infrastructure for fast and efficient money transfers.

Hence, compliance is a key focus because of a trend that could restrict growth in the remittance industry. This is the practice of de-risking and it means that some financial institutions are assessing the cost-benefit of certain operations and deciding to withdraw from high-risk activities so that they can improve their risk profiles. Moreover, internal compliance to safety, wages, employee benefits, compensations, and employee protection will create a positive environment in the work area for higher productivity of a company.

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The notable development of the global remittance industry is due to technological progress that also provides the foundation for greater security. Money transfer operators looking to the future will continue using new and emerging technologies to refine the services while ensuring the latest technologies to keep remittance networks regulated and compliant.

The writer Md. Manjur Hossain is the Company Secretary of NRB Global Bank.

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