It’s time to automate and accelerate your AML compliance processes.
Manual and time-consuming processes to comply with anti-money laundering (AML) regulations have been the norm for far too long in many financial institutions. Relying on legacy rules-based alerts and an army of analysts to manually review reams of data for potential money laundering is cumbersome and ineffective. Your backlog of alerts can pile up quickly, and false-positive rates can approach 99%. Automating your processes with an AI-based AML solution dramatically reduces false positives, accelerates the process, and lowers your cost of compliance. Financial institutions need to take decisive actions against the growth in money laundering to strengthen and expedite the process through upgraded technology, enhanced processes, and better utilization of internal and third-party data.
The Continued Rise of Money Laundering
Money laundering has been on the rise globally for a number of years. COVID’s impact has boosted it further, and experts predict no slowdown post-vaccine. In addition, the money-launderers are increasingly global in their reach, better organized, and technically savvy. The United Nations’ Office of Drugs and Crimes estimated worldwide money-laundering at USD$2 – $4 trillion. As with many estimates of financial crimes, this amount is likely understated.
Money laundering’s cancerous effect on financial networks and society cannot be overstated. Governments continue to try and address the threat with increasingly strict, multi-layered AML regulations. They have continued issuing significant fines for institutions not in compliance. Last year, penalties related to AML exceeded USD$10 billion globally, an 80% increase over the prior year.
In our brand-sensitive times, financial firms need to avoid having any whiff of a relationship with organized crime, terrorist groups, child exploitation rings, or other criminal syndicates. Most importantly, a perception of explicitly or implicitly helping perpetrators of financial crime will stain an organization’s brand, reputation, and impact the entire operations.
Typical AML Solution Technology and Process Challenges
For North American financial institutions, the cost of managing AML and related compliance activity rose 33% in 2020 to over USD$40 billion. Too often, AML activities are only performed periodically due to inefficiencies in processes and competing priorities.
AML processes are often homegrown, frequently “cobbled together” with manual activities and outdated technology. Fraud.net’s partner, ComplyAdvantage, recent survey of financial institutions revealed some interesting findings regarding AML processes:
- 93% of surveyed respondents felt real-time AML risk data would improve their compliance effectiveness.
- 69% stated improving fraud detection was the highest priority involving AML compliance.
- Improving technology, and the management and utilization of AML related data were the top focus areas for 2021.
The core issues faced by many financial institutions regarding their AML compliance process include:
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Outdated IT infrastructure
As large banks are inevitably part of multiple mergers, it results in a myriad of systems, many of which are often outdated. The legacy systems become difficult to upgrade and integrate with new technology.
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Legacy systems and processes are unable to keep up with new forms of money laundering
Criminals are going to keep moving away from the light of scrutiny. With their technological sophistication, complex operating structure, and knowledge of the schemes most scrutinized by banks and authorities, they constantly seek new tactics.
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Siloed and difficult to access data
Outdated systems create another major issue for institutions – data that is difficult to access. Oftentimes, analysts must resort to manually compiling data to perform analysis. The siloed data makes it difficult for comprehensive analysis and utilization of AI and other advanced methodologies.
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Senior leadership not providing effective risk management and oversight
Management failing to place the necessary stewardship of risk management and instilling a culture of control is often the root of problems related to AML, data breaches, and other fraudulent activities.
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Lack of collaboration
A defining change in money laundering plots is the increasingly global nature of fund movement. Criminal networks utilize intricate laundering schemes to move money across countries. Banks are hamstrung by not optimizing their sharing of AML-related data.
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Over-reliance on bank’s compliance and risk personnel
Lastly, while the compliance and risk teams are crucial in detecting money laundering, they should not be the only personnel watching for signs of money laundering. When front-line employees and others outside of the compliance and risk teams are not providing support in highlighting potential cases, a knowledgeable and available resource is wasted.
Fraud.net’s End-to-end AML Solution
Our solution can provide your organization with advanced detection and prevention of financial crimes and money laundering. You gain complete flexibility to customize to your unique requirements, and intelligent automation to increase productivity for your analysts and lower the cost of compliance.
Fraud.net’s software can provide your organization with:
- Customizable Risk Screening – Screen against global sanctions, adverse media, PEPs, and other lists
- Automated Customer Onboarding – Spot more risks and reduce false positives
- On-going Monitoring – Receive tailored, proactive alerts to rapidly spot suspicious behaviors
Read more in our eBook – 7 Steps to Automate and Accelerate Your AML Compliance Process. To learn more about how Fraud.net’s AML solution can give your organization a comprehensive, flexible tool to make your process more efficient and cost-effective, contact us today for a free demo.