Specialised Solutions for Non-Bank Lenders’ AML/CFT Compliance Management

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

We have designed our AML solutions to help you navigate the complexities of non-bank lenders’ AML requirements in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of non-bank lenders’ AML/CFT 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 non-bank lenders
• Any non-bank lenders' fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, non-bank lenders’ 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 non-bank lenders
• 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 non-bank lenders' anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

What Jurisdictions Do Our Non-Bank Lenders’ AML Solutions Cover?

• Non-bank Lenders' AML Solutions in Australia: Non-bank lenders’ AML requirements in Australia are outlined under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, with oversight from the Australian Transaction Reports and Analysis Centre (AUSTRAC).
• Non-bank lenders' AML Solutions in New Zealand: Non-bank lenders’ AML requirements in New Zealand are regulated under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and are usually supervised by the Department of Internal Affairs (DIA).
• Non-bank Lenders' AML Solutions in the United Kingdom: Non-bank lenders’ anti-money laundering obligations in the United Kingdom are governed by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, last amended in 2020, with supervision from the Financial Conduct Authority (FCA).
• Non-bank Lenders' AML Solutions in the United States: Non-bank lenders’ AML requirements in the United States are mandated under the Bank Secrecy Act (BSA) and the USA PATRIOT Act with regulations enforced by the Financial Crimes Enforcement Network (FinCEN).
• Non-bank Lenders' AML Solutions in the European Union: Non-bank lenders’ AML compliance across the European Union follows the Sixth Anti-Money Laundering Directive (AMLD6), overseen by the European Banking Authority (EBA)and National Competent Authorities (NCAs).
• Non-bank Lenders' AML Solutions in Singapore: Non-bank lenders’ AML requirements in Singapore are specified under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, the Terrorism (Suppression of Financing) Act 2002 (TSOFA), and the Monetary Authority of Singapore (MAS) Act, with supervisory function and AML/CFT guidelines from the Monetary Authority of Singapore (MAS).
• Non-bank Lenders' AML solutions for lenders based in tax havens

 

Which Types of Non-Bank Lenders Do We Support?

Focusing on money laundering (ML), terrorism financing mitigation (TF), and fraud prevention, our non-bank lenders' AML solutions cover the following types of lending service providers and institutions that are deemed to be AML/CTF reporting entities:

• E-Money Institutions
• Consumer Credit Firms
• Corporate Finance Providers
• Microfinance Institutions
• Real Estate Lenders
• Payday Lenders
• Peer-to-Peer (P2P) Lenders
• Equipment Financing Providers
• Auto Loan Providers
• Instalment Loan Providers
• Factoring Companies
• Other businesses subject to the non-bank lenders’ AML requirements

Additionally, we provide AML/CFT solutions for related financial services covering the capital-raising aspect of the business, including but not limited to non-bank deposit-taking and raising funds from retail and wholesale investors, addressing the money laundering, fraud, and terrorism financing issues for the entire AML/CFT regulated part of your business.

 

Non-Bank Lenders’ AML Advisory and Support

Our AML/CFT advisory services for non-bank lenders include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to non-bank lenders’ 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
• Non-bank lenders’ 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 non-bank lenders. Also, tailored to non-bank lenders’ fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising non-bank lending 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 non-bank lenders 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 non-bank lenders' 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 non-bank lenders’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help non-bank lenders 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 non-bank lenders’ 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 non-bank lenders' 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 non-bank lenders’ 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 non-bank lenders’ AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to non-bank lenders’ money laundering, 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 non-bank lenders
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The non-bank lenders’ 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 non-bank lenders’ 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 deposit-taking services
• Other obligations related to the non-bank lenders’ AML requirements

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world non-bank lenders’ money laundering, terrorist financing, and common non-bank lenders’ fraud scenarios, as well as specific challenges related to the non-bank lenders’ 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 non-bank lenders and other businesses subject to AML/CFT regulations.

 

 

Comprehensive AML/CFT Managed Solution for Non-Bank Lenders

Our non-bank lenders' 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” or (MLROs)) and as compliance managers, fully managing AML/CFT compliance and addressing the non-bank lenders’ anti-money laundering obligations for your business.

• Non-bank Lenders’ 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 effective 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 non-bank lenders’ 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 non-bank lenders’ AML requirements in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Non-bank Lenders’ 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 non-bank lenders’ 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 non-bank lenders’ money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to non-bank lenders’ AML requirements
• ongoing progress against your 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 non-bank lenders’ platforms.

• Non-Bank Lenders’ AML and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with non-bank lenders’ 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 non-bank lenders’ AML requirements for statutory reporting.
• Non-bank Lenders’ 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 Non-Bank Lenders’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with non-bank lenders’ 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.

 

 

Core Policies and Procedures for Non-Bank Lenders’ AML/CFT Compliance

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

• Non-bank lenders' AML/CFT Framework Development: Covering specific non-bank lenders’ 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 non-bank lenders’ 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 non-bank lenders 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 non-bank lenders’ 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 non-bank lenders’ 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

• Non-bank lenders' AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of non-bank lenders’ 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 non-bank lenders’ 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 non-bank lenders’ anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with non-bank lenders’ 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 AML/CFT solution for non-bank lenders 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, non-bank lenders’ 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, non-bank lenders’ 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 non-bank lenders' AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient non-bank lenders' 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
• Non-bank Lenders’ Fraud Prevention
• AML/CFT Incident Management
• Exception Escalation and Management
• Non-bank Lenders’ AML/CFT Obligations for External Reporting
• 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
• Non-bank Lenders’ AML/CFT obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to non-bank lenders' money laundering and terrorist financing red flags
• Effective CRM for Handling Non-bank Lenders’ AML Requirements

 

Non-Bank Lenders’ AML/CFT Audit Solution

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 non-bank lenders’ 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 non-bank lenders’ 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 non-bank lenders’ 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 non-bank lenders 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 non-bank lenders’ AML requirements and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

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

 

 

Non-Bank Lenders’ Fraud Prevention Solutions

The non-bank lenders’ anti-money laundering control environment is closely related to prevention of financial crime in general, and fraud prevention in particular. Non-bank lenders’ 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 Non-Bank Lenders’ 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 lending 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.

 

Non-bank Lenders’ 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 Non-Bank Lenders

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 non-bank lenders’ 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 non-bank lenders, 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. Visit our Compliance Solutions page for Non-Bank Lenders for more information
• 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 non-bank lenders, including preparation, licensing process management, regulator liaison, and post-licensing support in:

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

 

Common Money Laundering Risks for Non-Bank Lenders

Non-bank lenders’ 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 non-bank lenders represent only a sample and are not exhaustive.

 

Product-Related Risks and Non-bank Lenders’ AML Compliance

Some of the product-related ML/TF risks relevant to non-bank lenders’ anti-money laundering compliance include:

• Lack of Controls Over Large Cash Loan Repayments: Absence of mechanisms to verify the source of funds used for large cash repayments, particularly when commercial rationale for lump sum repayments or early termination of loans is unclear.
• Insufficient Oversight of High-Value Loan Products: Weak monitoring of the origins of funds and repayment terms for large-scale loans.
• Absence of Risk Categorisation for Lending Products: Failure to classify loans or credit facilities based on their ML/TF risk exposure.
• Exploitation of Loan Products for Fund Integration: Borrowers repaying loans with illicit proceeds or using revolving credit lines for non-commercial purposes.
• Inadequate Monitoring of Accelerated Loan Repayments: Lack of scrutiny on borrowers who accelerate repayment schedules, particularly through lump sum payments without clear commercial rationale.
• Insufficient Controls for Rapid Fund Transfers: Products enabling frequent or high-value electronic transfers without mechanisms to detect unusual patterns.

 

 

Jurisdictional Risks and Non-Bank Lenders' AML Compliance
Some of the jurisdictional risks relevant to non-bank lenders’ money laundering prevention include:

• Weak Monitoring of Cross-Border Repayments: Insufficient controls to detect or scrutinise repayments originating from high-risk jurisdictions or processed through international correspondent banks.
• Complications Arising from International Sanctions: Lack of effective mechanisms to identify and manage lending risks when dealing with business structures linked to sanctioned persons or entities, creating vulnerabilities to non-compliance with sanctions regimes.
• Inadequate Enhanced Due Diligence for Foreign PEPs: Weak mechanisms for conducting enhanced due diligence on borrowers with ultimate beneficial owners (UBOs) who are foreign Politically Exposed Persons (PEPs) from high-corruption-risk jurisdictions.
• Exploitation of Jurisdictional Risk Arbitrage Through Loan Repayments: Borrowers obtaining loans using source of wealth from low-risk jurisdictions to create a façade of legitimacy, while repaying loans with funds originating from high-risk jurisdictions.

 

Delivery Method Risks and Non-Bank Lenders’ AML Compliance

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

• Weak Controls for Linking Documentation to Customer Identity: Lack of mechanisms to effectively verify and link identification documents to the individual submitting them.
• Weak Controls for Linking Repayment Documentation to Borrower Identity: Lack of mechanisms to effectively verify and link repayment sources or supporting documentation (e.g., falsified repayment receipts, mismatched identities) to the actual borrower.
• Inadequate Monitoring of Payments via Third Parties: Absence of effective controls to detect repayments made through third-party accounts or unrelated entities, which obscure fund origins.
• Insufficient Detection of Complex or Unusual Repayment Patterns: Lack of mechanisms to flag structured repayments (e.g., multiple small payments through unrelated accounts), sudden large repayments, or schedules deviating from loan agreements.
• Weak Detection Mechanisms and Alert Systems for Digital Payment Platforms: Insufficient triggers, alert systems, and investigation procedures for detecting suspicious or high-risk repayments conducted through digital payment methods (e.g., mobile wallets, P2P payment applications).
• Requests for Loans in Non-Traditional or Restricted Currencies: Borrowers requesting loans in non-traditional currencies, digital currencies, or currencies subject to currency control laws may exploit gaps in regulatory oversight, increasing the risk of ML/TF activities. These requests create challenges for due diligence and risk assessments, particularly in jurisdictions where such currencies are not commonly used or lack effective monitoring mechanisms.

 

Customer Type Risks and Non-Bank Lenders’ AML Compliance

Some of the customer type-related ML/TF risks relevant to non-bank lenders’ money laundering prevention include:

• Inadequate Monitoring of Vulnerable Groups for Money Mulling Risks: Failure to identify and manage risks associated with customers prone to exploitation, such as students or low-income individuals, being used as intermediaries for laundering funds.
• Weak Controls for Customers with Low-Income and Poor Credit Histories: Insufficient mechanisms to assess and mitigate ML/TF risks posed by customers with limited financial resources or poor credit, particularly those seeking small, fast loans with minimal verification.
• Insufficient Screening for High-Risk Jurisdictions Linked to Borrowers: Lack of enhanced due diligence for customers with financial or familial ties to high-risk jurisdictions, increasing exposure to TF risks.
• Lack of Verification for Customers with Minimal Financial Histories: Weak CDD processes for individuals or businesses with limited or unverifiable financial histories, including startups or newly formed entities.
• Failure to Detect Structuring of Loan Repayments: Inadequate systems to identify structured repayment patterns designed to evade detection or obscure the true source of funds.
• Complex Ownership Structures in Corporate Borrowers: Weak controls to identify beneficial owners in corporate borrowers with layered or cross-border ownership structures, increasing vulnerabilities to ML.

 

• Insufficient Due Diligence on Subprime Borrowers: Failure to implement robust due diligence measures for high-risk subprime borrowers, particularly those with significant existing debt or history of default.
• High-Risk Industry Financing: Lack of controls to mitigate risks when lending to businesses operating in industries prone to financial crime, such as cash-intensive businesses, gambling, or unregulated financial services.
• Misuse of Loans for Cross-Border Transactions: Weak monitoring of loans issued domestically but used to facilitate cross-border transactions, particularly when linked to high-risk jurisdictions.
• Identity Fraud Risks with Non-Face-to-Face Applications: Inadequate mechanisms to verify borrower identities during online or phone-based loan applications, increasing exposure to impersonation and fraudulent borrowing.

 

Institutional Risks and Non-Bank Lenders’ AML Compliance

Some of the institutional ML/TF risks relevant to non-bank lenders’ anti-money laundering compliance include:

• Inadequate Screening of Institutional Borrowers: Weak verification processes for institutional borrowers, especially those involving layered or cross-border ownership structures or connections to high-risk jurisdictions, increase ML/TF exposure.
• Inadequate Oversight of Loan Brokers and Intermediaries: Insufficient monitoring and evaluation of AML/CFT compliance by loan brokers or intermediaries introducing borrowers create vulnerabilities in due diligence and ongoing loan monitoring.
• Limited Visibility of Payment Processors in Loan Repayments: Lack of mechanisms to assess and trace transactions facilitated by payment processors obscures the identities of ultimate payers, enabling fund layering and other ML activities.

 

Common Anti-Money Laundering Requirements for Non-Bank Lenders

Given the variety of non-bank lenders’ AML requirements, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring: Monitoring deposits, withdrawals, and other transactions 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 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 lending institutions.
• Independent AML/CFT Audits and Non-bank Lenders: 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 Non-Bank Lenders’ AML/CFT Issues

This is not an exhaustive list and could include:

During Customer Onboarding

• Failure to Conduct Loan Application Due Diligence Effectively: Lack of controls to identify false or fraudulent documentation during loan applications increases exposure to ML/TF activities, particularly with borrowers from high-risk jurisdictions.
• Weak Financial Background Checks for Borrowers: Insufficient due diligence on borrowers’ financial history, creditworthiness, or repayment capacity can lead to lending to high-risk individuals or entities.
• Inadequate Verification of Borrowers’ Source of Funds: Weak mechanisms to verify the legitimacy of borrowers’ declared source of funds increase vulnerabilities to money laundering through loan issuance.
• Non-Effective Risk-Based Approaches for Borrower Profiling: The absence of risk-based customer categorisation, especially for subprime borrowers or those in high-risk sectors, limits the ability to implement tailored due diligence measures.

After Customer Onboarding

• Insufficient Monitoring of Loan Repayments: Weak systems for identifying unusual repayment patterns, such as early repayments or irregular instalment amounts, fail to detect ML/TF indicators.
• Inadequate Oversight of High-Value Loan Transactions: Lack of effective monitoring systems for large loans or high-volume repayments risks masking laundering or fund integration activities.
• Failure to Review Borrower Risk Profiles: The absence of periodic re-assessment of borrower risk profiles, particularly for clients with changing financial behaviour, may lead to undetected ML/TF risks.
• Weak Detection Mechanisms for Third-Party Repayments: Inadequate controls to identify and assess third-party loan repayments can obscure the true source of funds and facilitate layering.

 

 

Common Non-Bank Lenders’ Fraud Risks

The following non-bank lenders’ fraud categories are not exhaustive:

• Non-Bank Lenders and Identity Fraud: Fraudsters may use stolen or falsified identities to apply for loans, open accounts, or manipulate lending systems, which can result in unauthorised access to funds or services.
• Non-Bank Lenders and Loan Application Fraud: Borrowers can submit false financial information, forged documentation, or fabricated project details to secure loans under false pretences.
• Non-Bank Lenders and Transaction Fraud: Fraud involving falsified repayment documentation, unauthorised repayment adjustments, or manipulation of loan disbursement records may be used to conceal illicit activity.
• Non-Bank Lenders and Insider Fraud: Employees are able to misuse access to lending systems to approve fraudulent loans, divert funds, or tamper with borrower records for personal gain.
• Non-Bank Lenders and Phishing Fraud: Cybercriminals may target borrowers or lenders with phishing schemes to steal sensitive credentials, enabling unauthorised transactions or account takeovers.
• Non-Bank Lenders and Technology Fraud: Exploitation of weaknesses in digital lending platforms, including hacking or unauthorised system access, can be used to divert loan disbursements or manipulate borrower accounts.
• Non-Bank Lenders and Collateral Fraud: Borrowers or intermediaries may overstate collateral value or provide falsified collateral documentation to secure larger loans, increasing risk exposure.
• Non-Bank Lenders and Syndicated Loan Fraud: Complex multi-lender transactions may obscure fraudulent borrower activities, including misrepresentation of financial standing or intended use of funds.
• Non-Bank Lenders and Cross-Border Lending Fraud: Loans issued to or repaid from jurisdictions with weak AML/CFT oversight can create opportunities to layer illicit funds through multi-jurisdictional transactions.
• Non-Bank Lenders and Subprime Lending Fraud (specific to Subprime Lenders): Borrowers with poor credit histories may exploit lenient lending criteria to obtain loans they cannot repay, often with fraudulent documentation.
• Non-Bank Lenders and Digital Asset Fraud: Fraud involving cryptocurrencies, such as unauthorised wallet access, manipulation of blockchain records, or fraudulent crypto-backed loans, can compromise platform security and integrity.
• Non-Bank Lenders and Third-Party Fraud: The use of intermediaries or unrelated third parties to repay loans may obscure the true source of funds, enabling fund layering or misuse.
• Non-Bank Lenders and Fund Diversion Fraud: Borrowers may misuse loans for unauthorised purposes, such as cross-border fund transfers or integration of illicit funds under the guise of legitimate borrowing.

 

 

Common AML/CTF Red Flags for Non-Bank Lenders

The Financial Action Task Force (FATF) and various national AML/CTF supervisors mention the following ML/TF red flags for non-bank lenders. This is not an exhaustive list:

• Inconsistent Loan Repayment Patterns: Borrowers making repayments inconsistent with their financial profiles, such as large lump-sum payments from unexplained or high-risk sources.
• Loan Application Discrepancies: Applications with incomplete, suspicious, or frequently altered details, including rushed applications with insufficient supporting documentation.
• Third-Party Repayments Without Justification: Loans repaid by third parties unrelated to the loan agreement, especially when these payments originate from high-risk jurisdictions.
• Loans Facilitating Overseas Transactions: Lending funds used for or repaid from overseas without clear business rationale, particularly involving high-risk or sanctioned jurisdictions.
• Frequent Early Loan Repayments: Borrowers repaying loans ahead of schedule without an economic justification, which could signal attempts to launder funds through the lender.
• Loans to Shell Companies: Lending to entities with no physical presence, legitimate business activities, or identifiable beneficial owners, increasing exposure to money laundering.
• Use of Overvalued or Difficult-to-Verify Collateral: Loans secured by assets significantly overvalued or lacking verifiable market data, which may indicate attempts to launder money under the guise of collateral-backed lending.
• Rapid Succession of Loan Transactions: Borrowers taking out and repaying multiple loans within a short period, which may be an effort to layer funds and obscure their origins.
• Loans Linked to Gambling or Speculative Investments: Lending where proceeds are channelled into gambling or speculative investments without clear economic justification, creating potential layering risks.
• Unusual Intermediary Involvement: Loans arranged by intermediaries without clear links to the borrower or lender, particularly when intermediaries are based in high-risk jurisdictions.