Banks Need Strong, Standardized Anti-Money Laundering Programs To Fight Financial Crime

Financial institutions are working hard to fight financial crime and bank fraud driven by demands to protect the bank’s assets, as well as by regulatory compliance. One area of specific focus is that of Anti-Money Laundering (AML).  For many institutions, there are several challenges to creating a sustainable AML organization – one that can respond to regulatory reporting mandates and provide information to support “business as usual” demands – while also finding, developing and retaining the talent needed to accomplish these critical activities.


Regulators expect functions to be standardized on a global level and across business lines.  The businesses themselves need consistency and efficiency, and one of the best ways to satisfy these expectations is to centralize functions.  This is an important first step in sharing and harmonizing skills throughout the organization.  Ultimately, banks and capital markets firms may wish to develop centers of excellence – with skills and expertise concentrated in specific locations – or to use managed services to gain access to desired expertise on an “as needed” basis.


While standardization, centralization and optimization may be ultimate objectives,  organizations should be careful not to attempt migrating the entire AML function at once.  Individual opportunities should be identified, converted and used as a foundation on which to build. Activities such as compliance case management or metrics reporting around risk, which may fall across multiple elements of the AML function today, are often a prime target to begin the journey towards standardization and/or centralization.


Some banks and financial institutions may want to look within a specific line of business, while others may want to consider a broader range of activities; the key is to start with a specific focus and develop a methodology that works and that can be leveraged.


The digital revolution presents firms with an opportunity to improve how they manage financial crime compliance, reduce financial crime risk, support customer management and help drive down compliance costs.   To accomplish this, firms need to get three things right:



1. Communications. Too many companies wait until they are faced with regulatory enforcement actions before updating their AML and sanctions compliance communication and training programs. That means personnel are not aware, familiar or knowledgeable of regulatory requirements or policy updates, let alone any of the implications.

Firms need to enhance their communication with strong messages from leadership and a consistent “tone at the top” to help build a compliance culture.  These messages should be conveyed along with the necessary technical information through a defined learning capability strategy, including a learning program for all employees that uses case-based training methods to simulate real challenges.


2. Technology.  Financial institutions should consider AML and sanctions solutions and screening software that can support regulatory requirements while minimizing time, resources and operational risk. Some firms try to stretch temporary solutions and stopgap measures into permanent answers, often resulting in wasted time and increased effort due to inefficient interim solutions.

Institutions should define their strategic roadmap in order to perform long-term objectives using a comprehensive sanctions technology architecture that is automated and integrated. The platforms in scope should include: 


  1. Visual analytics tools or real-time dashboards for identifying patterns, anomalies and trends. 
  2. Data warehouse and data feeds to access the right data. An advanced screening solution using efficient name matching algorithms to monitor and detect alerts. 
  3. Case management to handle robust workflow and generate reports. 


3. Data and monitoring. Institutions trying to improve the effectiveness of their AML monitoring systems may not be looking at the right areas of focus.  Many, for example, may have overlooked the periodic review of AML source data, which is essential for a fully functioning and efficient AML monitoring system.


There are several other elements to consider in relation to data monitoring. Data quality and data integrity should be focused on data sourcing analysis and data quality analysis, assessing completeness, conformity, consistency, accuracy and duplication.  Know Your Customer (KYC) and sanctions screening information should be integrated to capture the right information up front and should be included in sanctions data feeds. Finally, a risk-based approach to sanctions screening can deliver an efficient set of procedures that places greater emphasis upon higher risk areas.


Some firms have undertaken large-scale remediation programs and look-back efforts to achieve AML compliance.  A carefully designed, ongoing program can help assess capabilities against industry practices, identify strengths and weaknesses, and pinpoint needed improvements.  The overall compliance effort will continue – regulators, for example, have now turned their attention to anti-bribery and corruption issues – but a strong AML program can serve as a model for future efforts to fight crime while addressing regulatory concerns.