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What’s Driving AML Compliance Transformation in 2022 and Beyond?

A new report by Aite-Novarica (Aite) examines what’s driving transformation in anti-money laundering (AML) compliance. Specifically, the impact report examines the current AML ecosystem, key trends impacting financial institutions (FIs) and their AML compliance functions, and how they invest in technology and innovation to tackle today’s ever-evolving risk landscape.

As the effects of the global pandemic continue to linger, the report argues that FIs face increasing risk from financial crime. Aite explains that AML compliance programs must juggle numerous internal and external pressures:

  • Ever-emerging modes of criminal attacks
  • The increasing burden of regulation
  • Digital acceleration programs with growing demand for seamless customer experiences
  • A greater need to operate more efficiently and do more with fewer resources and smaller budgets.

Employing, training, and retaining alert analysts and investigators are critical in addressing these pressures. FIs are also exploring and applying new approaches, tools, and technologies to merge with talented human investigators to tackle illicit activity more effectively.

AML Compliance Technology Trends

AML technology investment continues at a rapid pace in 2022. Most firms surveyed recognize the need to enhance current processes and systems for Know Your Customer (KYC), Customer Due Diligence (CDD), sanctions screening, AML transaction monitoring, and alert and case investigations.

There is an increasing appetite to invest in and adopt supervised and unsupervised machine learning techniques. Gains stand to be made in reducing inefficiencies and making the AML operation more effective.

Findings from a recent ACAMS study echo this view. The report noted that AI and machine learning are gaining serious momentum in AML compliance.​​ The reduction of false positives, easier caseloads, streamlined reporting, and lower operational costs all benefit tremendously from advanced technologies.

The right AI and machine learning solution can be quickly integrated into existing compliance programs with minimal disruption. Adopters of these approaches are realizing significant efficiencies while also helping comply with rising regulatory expectations.

Cryptocurrency also presents a growing yet largely overlooked AML risk among financial services firms. Most firms (60% of Aite’s survey respondents) have no plans to deploy specific technology to evaluate and manage cryptocurrency AML risk. Many take the position that there is minimal risk since their organizational policies prohibit dealing directly with virtual asset service providers. 

How AI is Paying Off 

Many of the problems outlined in the report can be addressed by the following offerings from AML RightSource’s QuantaVerse Platform: 

  • QuantaVerse False Positive Reduction solution: Uses AI to clean and enhance transaction data before it is given to the transaction monitoring system (TMS) for rules testing. Putting better data into the TMS stops false positives before they are created, eliminating unnecessary investigations that the AML/BSA compliance team would otherwise have to address. This solution is reducing false positives by 25 to 40%.
  • QuantaVerse Automated Investigations Solution: Automates the data gathering and risk analysis required for alert and high-risk entity investigations. Unlike AI-enabled AML investigation tools that address individual steps within an investigation, the QuantaVerse Automated Investigations Solution automates across the essential steps of an investigative process including entity and counterparty profiling, network analysis, adverse media, and economic purpose. This AI solution is delivering 70% reduction in investigative time.
  • QuantaVerse Advanced Detection Solution: Reduces institutional and personal risk by identifying patterns and discerning anomalies that current approaches and systems regularly miss. The QuantaVerse Platform can query multiple years of entity transaction data, automate transaction analysis, and identify undiscovered financial crime including instances of fraud, pass-through, round-tripping, and other typologies going undiscovered by transaction monitoring systems. These investigative findings are also reported in QuantaVerse Financial Crime Reports (FCIRs) for expeditious review and adjudication.

Independently or in combination, the QuantaVerse Platform solutions are proven to help regulated entities become meaningfully more efficient with their AML investigations and to be more effective at ridding organizations of money laundering and other financial crime related to drug trade, human trafficking, terrorism, and political corruption.

Under significant and constant regulatory pressure, AML compliance executives need to adopt and rely on new technology and innovation now more than ever. To learn more, visit: www.amlrightsource.com.