3 Key Elements of an Effective Anti-Money Laundering Solution


3 Key Elements of an Effective Anti-Money Laundering Solution

Up to 49 percent of global organizations have found themselves on the receiving end of financial crimes like money laundering. To those that work in the banking and finance industries, this is a very serious problem. A single money laundering scandal can deal permanent damage to a financial institution, causing it to lose trust among ordinary and high-profile clients alike. Unfortunately, some companies don’t take the threat seriously enough. Others may be hesitant to think beyond the traditional approach to anti-money laundering (AML) solutions: a rules-based system.

Before this golden era for technology, financial institutions mostly adapted rules-based AML systems that flagged suspicious transaction amounts or automatically blocked transactions from other countries. But it’s very time-consuming—as well as costly—for staff to go through flagged transactions one by one and filter out the false positives.

If you are a stakeholder in a financial institution, you must recognize that it is no longer enough to rely on rules-based AML models alone. Deploying up-to-date anti-money laundering or AML software is the best preventive measure you can take for your company. Doing so may boost your overall compliance for AML and save you hefty fines from your regulators. It will also afford your institution better long-term protection from financial crime, which is always evolving.

But what qualities should you look for in potentialAML solutions for your company? As agreed upon by experts in the field, these are the three components your chosen software should have.

High Analytics Capabilities

The chief purpose of an AML software solution is to tell the good customers apart from the money launderers. Mistaking one for the other is what could cause grave repercussions to weigh down on your company. That’s why high analytics capabilities aresomething you should prioritize when expanding your tech stack for AML. You will want a solution that can capably analyze the missing links that signal fraudulent behavior but could be missed by a rules-based model. Your software should be able to detect questionable money movement patterns, as opposed to questionable transactions only.

The solutions available today rely on artificial intelligence and machine learning to interpret algorithms. They are much better at determining the precedents for fraudulent activity and preventing it from happening. In essence, a good AML solution is proactive and capable of obtaining the bigger picture that may inform financial crimes. Thanks to its analytics capabilities, it will do more than reduce the number of false positives based on predetermined rules. It will better equip you to spot alarming behavior in your customer transactions—and nip the problem in the bud before it’s too late.

Superior Data Management

The second important quality that your AML solution should have is excellent data management. The software must be able to handle and accurately manage large amounts of datafrom internal and third-party sources. It should be able to filter out anomalies or inconsistencies to optimize data forpredictions. Lastly, it should help you visualize key insights from your data in a manner that’s easy for you and your fellow stakeholders to understand.

Thus, a reliable AML solution helps your company get the most value out of your data lake, or the centralized repository of all your data. Use these enhanced data management abilities to sort through complex samples and come to conclusions that will benefit your customers.

A Strong, Resilient, and Collaborative Platform

Lastly, your AML solution should run on a platform that is upgradable, integrable, designed for resilience, and easy to collaborate on. Look for AML software that’s easy to scale up and improve upon, thanks to its architecture and to the tech mindshare that supports it.

Your company isn’t the only entity that a great AML platform will serve. It also bolsters the work of other stakeholders involved in AML activities both in your home country and abroad, like regulatory bodies. The platform will also support an ecosystem of services that combat money laundering, such as automation and software-as-a-service providers. It should amplify your efforts to shield your company and your customers from threats, all by coordinating with partners and services that can help you.

Conclusion: Why Upgrading Your AML Technology is the Best Course of Action

Even if your company has never fallen victim to a major money laundering scandal, it’s always a good idea to ensure that you never become vulnerable to such activities. Money laundering networks have adapted increasingly sophisticated methods to further their craft. If they’ve evolved their operations, then you must do so as well. Truly, fortifying your current AML protocols will help you retain your good track record with customers’ data and financial assets. 

The only way to go is up. Upgrade your AML solution today and ensure that advanced analytics, good data management, and a future-ready software platform are all part of its core.

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