To comply or not to comply? US bins AML law, Umazi offers compliance at scale

Money laundering is an oft-cited concern for businesses seeking fraud prevention tools; hence the familiar industry shorthand for anti-money laundering, AML. The U.S. Treasury Department, however, does not seem concerned. Reuters reports that the department will not enforce an anti-money laundering law that obliges millions of business entities to disclose the identities of their real beneficial owners.

The Corporate Transparency Act was introduced by the Biden administration, and has faced legal challenges. Now, the Trump administration is killing it on the grounds that it puts “a burden on low-risk entities.”

A statement from the Treasury Department says it will not enforce any penalties under the act against U.S. citizens or domestic reporting companies, and that it intends to issue a rule narrowing the scope of the act to foreign reporting companies.

Politically, the move is in keeping with both the current administration’s push for U.S. protectionism and its taste for deregulation. However, canning AML laws seems unlikely to have the effect of making U.S. businesses more robust, or to encourage legitimate foreign investment. Indeed, it may have the (presumably unintended) effect of enabling more money laundering.

Umazi compliance orchestration engine enables AI risk assessments

Other nations have chosen to take a different stance on AML regulations. A post on Fintech Finance News from London, UK-based compliance and digital identity platform Umazi makes the case for corporate digital identity systems – and compliance is a big piece of the pie.

Cindy van Niekerk, CEO of Umazi, says corporate digital identity offers a way to tackle long-standing challenges. “And establishing identities throughout the value chain is critical both to ensure the security of trade and to facilitate efficient access to finance through the issuance of letters of credit or other instruments.”

Umazi’s platform includes a decentralized corporate identity wallet that allows businesses to store and share verified credentials. Per the post, by integrating multiple trusted data sources, Umazi creates a “continuously updated, reusable identity framework that streamlines compliance at scale.”

It also offers a proprietary compliance orchestration engine to coordinate data ingestion, model processing and real-time updates, for “accurate and timely” risk assessments produced by machine learning models.

Umazi says automated due diligence reduces manual compliance work through AI-driven workflows, while reusable business digital IDs eliminate redundant KYC and compliance checks and Web3-enabled trust networks enhance security with decentralized identity verification.

“We customize our solution to an organisation’s requirements, including GDPR, integrate with applications through RESTful API, and handle thousands of checks daily, whilst safeguarding against fraud,” van Niekerk says.

CFIT issues new report on Digital Company ID project

Umazi has also weighed in on the Centre for Finance, Innovation and Technology (CFIT)’s new report on fighting economic crime with Digital Company ID, “a unique digital representation of a business entity for the purpose of digital verification.” Digital Company ID’s data stack consists of bespoke databases, like Cifas for fraud risk data, optional datasets for SMEs like HMRC tax status, and mandatory datasets for things like registration with Companies House.

A post on Umazi’s LinkedIn page says “it’s encouraging to see the UK taking a leadership role in fostering fintech solutions that tackle fraud and financial crime at scale.”

The CFIT document, which its own post calls “a blueprint for fighting economic crime, outlines seven recommendations for government, regulators and the financial sector – the first being that “CFIT, in collaboration with industry, should test and launch a fully functional Digital Company ID prototype preferably with the support of the Financial Conduct Authority (FCA) Innovation services.”

Article Topics

AML  |  Centre for Finance Innovation and Technology (CFIT)  |  digital company ID  |  digital identity  |  fraud prevention  |  identity verification  |  KYB  |  KYC  |  legislation  |  regulation  |  Umazi