The real price of AML

The real price of AML compliance

There is a staggering amount of money laundered each day

Most financial institutions require a manual and recurring effort to achieve an up-to-date understanding of their clients. This majorly affects the quality of compliance efforts and as a result, money laundering detection.

As decisions are made in real-time, teams often have to make them on an incomplete picture, leaving institutions exposed to risk and limiting their ability to take advantage of opportunities.

Both regulators and financial institutions turn to innovation to decrease the costs of AML compliance but there is more to it than billions in financial losses.

Introduction

Effective AML inroads are critical given the massive costs these illegal activities cause for both the economy and society. Therefore, regulators and financial institutions are coming together to find ways to improve their track record of monitoring, identifying and preventing money-laundering-related crimes from taking place.

The EU is stepping up their game in an effort to strengthenits regulatory net and make a dent in the estimated trillion dollars that are still being laundered around the world every year. The EU’s priorities are to resolve the fragmented and inconsistent AML standards across all of the regulated states, confront the challenges posed by privacy policies, and then turn those challenges into opportunities which would contribute to catching criminals and address shortcomings in financial institutions’ compliance frameworks.

Banks and other financial institutions are realizing they will have to do things differently or they will continue to face spiralling direct and indirect costs of compliance functions; tasks that are still mainly a manual workload and are not nearly as effective in detecting financial crime as they should be given the huge investments to remain AML-compliant. What’s more, the financial industry keeps disrupting and evolving along with the digital transformation, which is a clear indication that the technology will also fuel the improvements of the compliance processes...