Specialised Solutions for Crowdfunding AML/CFT Compliance Management

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CFT), and fraud prevention solutions for crowdfunding anti-money laundering compliance that are tailored to applicable AML/CTF (aka CTF) laws, regulations, AML/CTF supervisors' guidance for crowdfunding services and platforms, sector-specific red flags and indicators, to help your business meet applicable obligations that cover crowdfunding money laundering and terrorist financing risk mitigation, crowdfunding fraud prevention, the detection and handling of other types of financial crime.

 

We have designed our AML solutions to help you navigate the complexities of crowdfunding AML requirements in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of crowdfunding AML compliance, including but not limited to:

 

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

 

• Applicable Regulatory and Fraud Prevention Obligations:
• AML/CTF regulations for crowdfunding platforms
• Any crowdfunding fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, crowdfunding platforms’ obligations under:

• Privacy laws
• Financial market laws
• Fair trading laws
• Financial licensing requirements
• Other relevant regulatory frameworks

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for crowdfunding platforms
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to crowdfunding anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

What Jurisdictions Do Our Crowdfunding AML Solutions Cover?

• Crowdfunding AML Solutions in Australia: AML obligations for the crowdfunding sector in Australia are governed by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, with oversight by AUSTRAC.
• Crowdfunding AML Solutions in the United States: AML requirements for crowdfunding in the United States are regulated under the Bank Secrecy Act (BSA) and supervised by FinCEN.
• Crowdfunding AML Solutions in the United Kingdom: AML compliance for the crowdfunding sector in the United Kingdom follows the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, last amended in 2020, with oversight by the FCA.
• Crowdfunding AML Solutions in Singapore: AML obligations for crowdfunding businesses in Singapore are regulated by the Payment Services Act 2019 under the supervision of the Monetary Authority of Singapore (MAS).
• Crowdfunding AML Solutions in New Zealand: Sector-specific crowdfunding AML obligations in New Zealand are governed by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, with oversight by the Financial Markets Authority (FMA).
• Crowdfunding AML solutions in the European Union: AML compliance for crowdfunding platforms across the European Union is governed by the Sixth Anti-Money Laundering Directive (AMLD6), with oversight by National Competent Authorities in each member state.
• Crowdfunding AML Solutions in the Cayman Islands: AML requirements for crowdfunding in the Cayman Islands are regulated under the Anti-Money Laundering Regulations (2020 Revision), with oversight by the Cayman Islands Monetary Authority (CIMA). Platforms that handle virtual assets may be subject to additional AML obligations under the Virtual Asset (Service Providers) Act (2020).
• Crowdfunding AML Solutions in Bermuda: AML requirements for crowdfunding in Bermuda are regulated under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008, with supervision by the Bermuda Monetary Authority (BMA).
• Crowdfunding AML Solutions in the British Virgin Islands: AML obligations for crowdfunding in the British Virgin Islands are governed by the Anti-Money Laundering Regulations, 2008 (with any subsequent amendments), with oversight by the British Virgin Islands Financial Services Commission (BVIFSC).
• Crowdfunding AML Solutions in Malta: AML requirements for crowdfunding in Malta are regulated by the Prevention of Money Laundering Act and the Prevention of Money Laundering and Funding of Terrorism Regulations, as amended up to 2020, with oversight by the Malta Financial Services Authority (MFSA).
• Crowdfunding AML Solutions in the Isle of Man: AML obligations for crowdfunding in the Isle of Man follow the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019, regulated by the Financial Services Authority (FSA).
• Crowdfunding AML Solutions in Vanuatu: AML requirements for crowdfunding in Vanuatu are governed by the Anti-Money Laundering and Counter-Terrorism Financing Act, last updated in 2014, with oversight from the Vanuatu Financial Services Commission (VFSC).

 

 

 

Which Types of Entities Do Your Crowdfunding AML Solutions Cover?

Focusing on money laundering (ML), terrorism financing mitigation (TF) and fraud prevention, our crowdfunding AML solutions cover the following types of crowdfunding service providers and platforms that are deemed to be AML/CTF designated service providers (aka "reporting entities”):

• Equity Crowdfunding Platforms
• Lending-Based Crowdfunding Platforms
• Real Estate Crowdfunding Platforms
• Debt Crowdfunding Platforms
• Royalty-Based Crowdfunding Platforms
• Hybrid Crowdfunding Platforms
• Community-Based Crowdfunding Platforms
• Microfinance Crowdfunding Platforms
• P2P Insurance Crowdfunding Platforms
• Broker-Dealer or Funding Portals
• Other crowdfunding firms that are subject to the crowdfunding AML requirements

 

Crowdfunding AML Advisory and Support

Our AML/CFT advisory services for crowdfunding platforms include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the crowdfunding AML requirements for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring,customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• Crowdfunding fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to crowdfunding platforms. Also tailored to the crowdfunding fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising crowdfunding service providers on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping crowdfunding platforms compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with crowdfunding AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic crowdfunding anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help crowdfunding platforms to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it's essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support crowdfunding anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

 

AML/CFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to the crowdfunding AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the crowdfunding AML requirements, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the crowdfunding AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to crowdfunding money laundering risks, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for crowdfunding platforms
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The crowdfunding money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to crowdfunding money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of the Cross-border custodial services – optional
• Other obligations related to the crowdfunding AML requirements

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world crowdfunding money laundering, terrorist financing, and common crowdfunding fraud scenarios, as well as specific challenges related to the crowdfunding AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CFT training solutions we offer to crowdfunding platforms and other businesses subject to AML/CFT regulations.

 

 

Comprehensive AML/CFT Managed Solution for Crowdfunding Platforms

Our crowdfunding AML/CFT compliance management solutions include but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka "Money Laundering Reporting Officers" (MLROs)) and as compliance managers, fully managing AML/CFT compliance and handling the crowdfunding anti-money laundering obligations for your business.
• Crowdfunding Anti-money Laundering Risk Management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO Verification Streamlining: Verification of beneficial ownership in line with the crowdfunding AML requirements, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the crowdfunding AML requirements in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Crowdfunding Fraud Prevention Solution: Related to the above, we also help with the implementation of fraud alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the crowdfunding AML requirements and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:

• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific crowdfunding money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• the status of compliance with the crowdfunding AML requirements
• the progress of an organisation-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with AML/CFT compliance requirements for crowdfunding platforms.

• Crowdfunding AML and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with crowdfunding anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with crowdfunding AML requirements for statutory reporting.
• Crowdfunding Fraud Prevention Management: Implementing targeted fraud prevention measures, enhancing internal controls, and helping you comply with internal policies and external regulations. We work to mitigate fraud risks without disrupting business processes, aligning fraud prevention efforts with your broader compliance objectives.

 

 

KYB Solutions for Crowdfunding Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with crowdfunding AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

Crowdfunding AML/CFT Policies and Procedures

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective crowdfunding AML/CFT compliance management, including the following:

• Crowdfunding AML/CFT Framework Development: Covering specific crowdfunding AML requirements and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the crowdfunding AML requirements for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by crowdfunding platforms as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to crowdfunding anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our crowdfunding AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information.

• Crowdfunding AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of crowdfunding AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and the crowdfunding AML requirements as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of crowdfunding anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to maintain compliance with crowdfunding AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our crowdfunding AML/CFT solution focuses on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:

• updates in the AML/CTF laws, crowdfunding AML regulations or AML supervisors' sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, crowdfunding fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance: Our crowdfunding AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient crowdfunding anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT reporting
• Crowdfunding AML/CFT Obligations for External Reporting
• AML/CFT Incident Management
• Exception Escalation and Management
• AML/CFT Management Automation: Including automated response workflows and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• Crowdfunding AML/CFT Obligations for Record-Keeping
• Crowdfunding Fraud Prevention
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to crowdfunding money laundering and terrorist financing red flags
• Effective CRM for handling Crowdfunding AML Requirements

 

 

Crowdfunding AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with crowdfunding anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both local AML/CTF obligations and specific crowdfunding AML requirements. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for crowdfunding AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare crowdfunding platforms for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting crowdfunding AML requirements and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for the alignment with:

• your current and future goals
• your business model
• your current and prospective client inflow
• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• crowdfunding anti-money laundering compliance obligations
• the specific AML/CFT compliance areas or requirements (this audit process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to crowdfunding anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for more intelligent AML/CFT compliance. Please visit our Internal AML/CFT Review Solution page for more information.

 

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our crowdfunding AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 

 

Crowdfunding Fraud Prevention Solutions

The crowdfunding anti-money laundering control environment is closely related to prevention of financial crime in general and fraud prevention in particular. Crowdfunding fraud prevention controls and ML/TF controls can form a unified compliance management framework tailored to the specific ML/TF and fraud risks your business is facing or is likely to face. Our Crowdfunding Fraud Prevention Solutions include:

• Fraud Risk Assessment and Analysis: Conducting assessments to identify and prioritise fraud risks across your operations, allowing you to allocate resources effectively.
• Incident Response and Investigation: Creating response plans to manage fraud incidents, including guidelines for investigating, documenting, and applying corrective actions to minimise potential damage.
• Implementing Preventive Measures: Setting up checks, alerts, and controls to tackle fraud risks in the crowdfunding sector, as well as drafting a set of procedures and guidelines to address fraud scenarios that you are likely to face or have faced.
• Data Analytics for Fraud Detection: Leveraging data analytics to identify focus points for your fraud prevention efforts and areas for improvement.
• Fraud Detection Technology Implementation: Choosing and helping you implement appropriate technology for real-time fraud detection.
• Fraud Awareness Training: Educating staff about fraud risks, including identity theft and impersonation.
• Further information: Please visit our Fraud Management Solutions page for more information.

 

Crowdfunding fraud response requirements: In the current risk and compliance environment, implementing fraud prevention measures is either already mandated by law in some jurisdictions or, at minimum, expected by government agencies, financial market participants, and other stakeholders.

 

Broader Risk & Compliance Solutions for Crowdfunding Platforms

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the crowdfunding AML requirements into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for crowdfunding platforms, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options. For more information, visit our Specialised Compliance Management Solutions page for Crowdfunding Platforms and Services
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for crowdfunding platforms, including preparation, licensing process management, regulator liaison, and post-licensing support in:

• Australia
• Singapore
• The United Kingdom
• The United States
• New Zealand
• Offshore financial centres and tax havens
• The European Union

 

 

Common Money Laundering Risks for Crowdfunding Platforms

Crowdfunding money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by crowdfunding service providers represent only a sample and are not exhaustive.

 

Product-Related Risks and Crowdfunding AML Compliance

Some of the product-related ML/TF risks relevant to crowdfunding anti-money laundering compliance include:

• Lack of Verification for Project Owners and Beneficiaries: Failure to verify the identities and legitimacy of project owners or beneficiaries undermines transparency in campaign funding.
• Inadequate Controls Over Anonymous Contributions: Absence of processes to identify contributors using pseudonyms or anonymous accounts prevents proper oversight of fund sources.
• Insufficient Monitoring of Complex Funding Structures: Lack of oversight for layered or cross-border funding arrangements reduces transparency in financial flows.
• Lack of ML/TF Risk Criteria and Measures for Campaigns: Absence of defined ML/TF risk criteria for different campaign types and tailored AML/CFT measures during initial and ongoing due diligence results in inconsistent risk management.

 

Jurisdictional Risks and Crowdfunding AML Compliance

Some of the jurisdictional risks relevant to crowdfunding money laundering prevention include:

• Funding Sources from High-Risk Jurisdictions: Contributions originating from countries with weak AML/CFT enforcement increase the risk of undisclosed or illicit funding entering campaigns.
• Involvement of Offshore Entities in Campaigns: Campaigns involving offshore companies from jurisdictions with lax transparency laws create difficulties in identifying beneficial ownership and tracking fund origins.
• Cross-Border Payments Through Informal Channels: The use of unregulated or informal payment methods, such as hawala systems linked to jurisdictions with lighter AML/CFT, obscures financial flows linked to crowdfunding campaigns.
• Contributions Tied to Sanctioned Jurisdictions: Lack of mechanisms to detect campaign funding originating from or routed through sanctioned countries exposes platforms to regulatory violations and ML/TF risks.

 

 

Delivery Method Risks and Crowdfunding AML Compliance

Some of the service delivery method-related ML/TF risks relevant to crowdfunding anti-money laundering compliance include:

• Use of Anonymous Online Platforms: Lack of mechanisms to verify and monitor contributions made through anonymous or pseudonymous channels increases difficulty in identifying fund sources.
• Lack of Oversight for Third-Party Payment Processors: Absence of robust controls to review and monitor payment processors with weaker AML/CFT standards may facilitate illicit transactions.
• Inadequate Monitoring of Cross-Border Contributions: Failure to implement systems that review international payments to campaigns reduces the ability to detect fund flows linked to high ML/TF risks.
• Insufficient Linking of Supplied Documents to Donor or Campaign Runner Identities: Absence of mechanisms to link provided documentation, such as IDs or financial records, to the actual identity of donors or campaign organisers creates vulnerabilities in detecting false or misrepresented identities.
• Insufficient Triggers and Controls for Informal Payment Methods: Failure to implement transaction reviews or tailored controls for contributions processed through cryptocurrency wallets, hawala systems, or other informal channels limits the detection of illicit fund transfers.

 

 

Customer Type Risks and Crowdfunding AML Compliance

Some of the customer type-related ML/TF risks relevant to crowdfunding money laundering prevention include:

• Use of Money Mules to Inject Illicit Funds: Lack of mechanisms to identify and track contributors acting as intermediaries (money mules) allows illegal funds to be injected into campaigns, masking their true origin.
• Exploitation of Crowdfunding for Tax Avoidance: Absence of controls to detect and prevent funds being directed to failing campaigns with the intent to write off contributions as tax-deductible losses creates vulnerabilities to tax avoidance schemes.
• Fraudulent Campaigns to Funnel Funds Offshore: Insufficient due diligence on campaign organisers may allow fraudsters to collect large sums under false pretences and transfer the funds offshore, bypassing financial scrutiny.
• Commingling of Illicit and Legitimate Funds: Lack of processes to monitor campaigns receiving funds from multiple sources increases the risk of blending illicit and legitimate contributions, obscuring the origin of criminal proceeds.
• Insufficient Mechanisms to Identify PEP Contributors, Campaign Organisers, or Affiliates: Lack of processes to identify politically exposed persons (PEPs) controlling campaigns or being affiliates of campaigns, including charitable initiatives, and failure to apply appropriate account monitoring measures increases ML/TF risks.

 

 

Standard Anti-Money Laundering Requirements for Crowdfunding Platforms

Given the variety of crowdfunding AML requirements, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of donors' and project owners' identities, as well as identities of beneficial owners for customers that are legal entities.
• Conducting transaction monitoring: Monitoring deposits, withdrawals, and transactions on the platform to identify and report suspicious transactions and patterns.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise ML/TF red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for crowdfunding platforms.
• Independent AML/CFT Audits and Crowdfunding Platforms: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

 

Common Crowdfunding AML/CFT Issues

This is not an exhaustive list and could include:

 

During Customer Onboarding

• Failure to Conduct Comprehensive Due Diligence on Campaign Creators: Lack of processes to assess the nature and purpose of the campaign, verify the sources of wealth, or identify beneficial ownership structures increases the risk of onboarding fraudulent or high-risk individuals.
• Inadequate Verification of Donor Identities: Failure to link donor-provided documentation to their actual identities reduces transparency and creates vulnerabilities for ML/TF activities.
• Insufficient Risk Profiling for Campaigns: Absence of risk-based criteria for assessing campaigns increases exposure to campaigns linked to high ML/TF risk industries or jurisdictions.

 

After Customer Onboarding

• Failure to Monitor Irregular Campaign Funding Patterns: Lack of systems to detect unusual funding patterns, such as small structured transactions or sudden large contributions, allows suspicious activity to go unnoticed.
• Inadequate Ongoing Due Diligence: Failure to continuously assess the risk profile of active campaigns or track changes in project details or funding sources increases the likelihood of ML/TF exploitation.
• Weak Oversight of Fund Disbursements: Lack of monitoring for how funds are withdrawn or used after campaign completion creates risks of illicit fund transfers or misuse.

 

 

Common Crowdfunding Fraud Risks

The following list of Crowdfunding fraud types is not exhaustive:

• Crowdfunding and Identity Fraud: Fraudsters use stolen or falsified identities to create fake campaigns, impersonate donors, or misrepresent project initiators, facilitating unauthorised access to funds. Donors use stolen payment credentials or structure small, frequent payments to conceal illicit funds or exploit platform vulnerabilities.
• Crowdfunding and Campaign Fraud: Fake or fraudulent campaigns are created to solicit funds under false pretences, diverting contributions for personal or illicit use instead of the stated purpose.
• Crowdfunding and Transaction Fraud: Manipulated or falsified transaction records are used to justify fund transfers, creating the appearance of legitimate activity while diverting funds.
• Crowdfunding and Insider Fraud: Employees or insiders exploit their access to platform systems to tamper with campaign details, divert contributions, or falsify project success metrics for personal gain.
• Crowdfunding and Phishing Fraud: Phishing schemes target donors or project initiators to steal sensitive login credentials, enabling unauthorised access to accounts and fund transfers.
• Crowdfunding and Technology Fraud: Exploits vulnerabilities in platform technology, including hacking, denial-of-service attacks, or manipulation of platform data to siphon funds or disrupt operations.
• Crowdfunding and Digital Asset Fraud: Fraud involving cryptocurrencies or tokenised assets, such as fake token offerings, unauthorised wallet access, or misrepresentation of digital asset projects for laundering funds.
• Crowdfunding and Fund Mismanagement: Project creators or platform operators embezzle raised funds, misrepresent how contributions are allocated, or fail to deliver promised outcomes to backers.
• Crowdfunding and Cross-Border Fraud: Use of international platforms to obscure the origin of funds, layer illicit contributions, or exploit jurisdictional loopholes for fraudulent transfers.
• Crowdfunding and Reward Fraud (Reward-Based Crowdfunding): Promises of rewards that are overpriced, misrepresented, or never delivered, often used to solicit funds under false pretences.
• Crowdfunding and Loan Fraud (Debt-Based Crowdfunding): Borrowers present falsified financials, misrepresent creditworthiness, or secure loans with no intention of repayment, leveraging weak verification systems.

 

 

Common AML/CTF Red Flags for Crowdfunding Platforms

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following ML/TF red flags for crowdfunding services and platforms. This is not an exhaustive list:

• Misuse of Campaign Funds by Project Promoters: Project funds are withdrawn in structured cash transactions or transferred abroad through personal accounts with no connection to the campaign's stated purpose.
• Rapid and Unexplained Campaign Goal Achievement: Campaigns that quickly meet funding goals, abruptly close, or exclusively rely on anonymity-enhancing tools, such as virtual assets, without clear justification raise suspicion of misuse for terrorist financing.
• Use of Financial Intermediaries with No Geographic Link to the Project: Funds routed through banks or intermediaries disconnected from the project's location or stated purpose may indicate attempts to obscure their origin or destination.
• Unverified Project Promoters with Adverse Indicators: Promoters involved in prior campaigns linked to hate speech, violent extremism, or associations with terrorist-listed entities present clear CTF risks.
• Pooling of Donations via Informal Channels: Contributions aggregated through multiple unrelated accounts or intermediaries with weak AML/CFT controls make it difficult to trace the origin of funds.
• Disappearing Campaign Information: Crowdfunding campaigns or project details vanishing from platforms post-fundraising could indicate efforts to avoid scrutiny or investigation into fund misuse.
• Contributions from High-Risk Jurisdictions: Donations originating from sanctioned or conflict-prone regions, routed through informal channels, or flagged by transaction monitoring systems should trigger enhanced due diligence.
• Unexplained Donor Activity: Donors contributing amounts inconsistent with their profile, showing links to extremist networks, or using IP addresses in conflict zones warrant immediate investigation.
• Disproportionate Fundraising Compared to the Project Scope: Campaigns raising significantly more funds than needed or justified by the project's stated goals may indicate potential laundering or misuse.
• Inconsistent Campaign Execution Plans: Campaign activities or disbursements deviating from declared funding sources or objectives raise suspicion of fund diversion or laundering.
• Campaigns with Opaque or Complex Fund Transfers: The use of convoluted fund transfer mechanisms within campaigns obscures the origin of funds and complicates risk assessments.
• Connections Between Borrowers and Lenders (Debt-Based Campaigns): Shared addresses, financial relationships, or coordination between borrowers and lenders could indicate fund recycling or collusion.
• Unjustified Fund Returns (Equity-Based Campaigns): Issuers cancelling share issues and returning funds without clear reasons create risks of laundering or fund diversion.
• Anonymous Large Donations (Donation-Based Campaigns): Large contributions with no linked donor information or verification signal potential ML/TF risks.
• Multiple Small Donations Avoiding Detection Thresholds (Donation-Based Campaigns): Structured contributions designed to evade detection or reporting thresholds suggest illicit activity.
• Overpriced Rewards (Reward-Based Campaigns): Contribution incentives that are disproportionately high compared to campaign objectives or goals raise red flags for fraud or laundering.
• Frequent Changes in Campaign Details or Rewards (Reward-Based Campaigns): Constant updates to campaign details or incentives may indicate attempts to manipulate or obscure the true purpose of the campaign.
• Unexplained Repayment Sources (Debt-Based Campaigns): Borrowers repaying loans without traceable or legitimate sources of funds raise concerns of laundering.
• Interest Rates Not Matching Risk Levels (Debt-Based Campaigns): Offering rates deviating from market norms or risk-based expectations suggests ulterior financial motives or fund layering.