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Every month, the Payer Security Focus breaks down a different topic in security and compliance with information relevant to payers and actionable steps to help build a more robust security and compliance program at their organizations. This month’s topic is anti-money laundering.

  • What Is Anti-Money Laundering (AML)?
    Money laundering is the process of turning “dirty money” or the profits from a crime into legitimate money. This is primarily done through incorporating illegal funds into the financial system in such a way that it is meant to avoid detection from law enforcement. Common reasons for money laundering are tax evasion, terrorism financing and avoiding international sanctions.

    AML is the set of regulations and controls in place to detect and stop illegal funds from entering into our financial system. If organizations that handle financial transactions do not have a sufficient AML program in place, the organization and the employees may face significant fines and possible jail time if money laundering is committed through their organizations, whether they are aware or not.

  • Why Should Payers Care?
    Money laundering is a risk for payers when they select a vendor for consumer-to-provider and payer-to-provider payments. The vendor that payers trust for these transactions must have a comprehensive AML program in place to prevent, detect and report money laundering activities. The AML program must be compliant with all applicable Bank Secrecy Act (BSA) regulations.

    If a payer decides to build ERA/EFT internally rather than partnering with a third party vendor, it may be held responsible for maintaining an AML program.

  • What Are the Challenges to Payers?
    Payers should beware of vendors that self-attest to a compliant and robust AML program. For a vendor to maintain a compliant AML program, it requires significant effort by a designated AML compliance resource. To determine if vendors have the appropriate AML program in place, payers must ensure the following key components are included:

    • OFAC/SDN checks: ensuring any business receiving funds does not appear on the Office of Foreign Assets Control (OFAC) List or the Specially Designated Nationals (SDN) List, which list businesses that are prohibited by the U.S.
    • Customer identification through know your customer (KYC) checks before moving funds to a bank account
    • Monitoring money movement for suspicious activity
    • Reporting on suspicious transactions
    • Maintaining annual audits and AML awareness training for staff
  • What Are the Benefits to Payers?
    Only trusting vendors with stringent AML programs offers payers the peace of mind that their healthcare payments are secure and compliant. Money laundering is a serious crime that can result in fines and prison time. Organizations that aid in money laundering activities can also be held liable and are subject to similar punishments as the criminals receive. If a payer works with a vendor that is convicted of money laundering crimes or is found culpable, it is very unlikely the payer organization will be held responsible for those crimes as well; however, the association to that vendor may bring a payer negative press and lost trust in the industry.
  • AML Checklist for Payers
    Payers unsure if vendors have sufficient AML programs can ask the following questions to better understand the vendor’s efforts. If the vendor is unsure or not confident in their answers, it may be time for a change.

    • Do you have a thorough and dedicated KYC process?
    • Do you monitor money movement on a daily basis to detect suspicious activity?
    • How do you document and report suspicious activity detected?
    • Do you have an annual audit of your AML program?
    • Do you have an annual staff training program on AML awareness?

Read next month’s Payer Security Focus where we’ll take a closer look at money transmission.

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