How to Choose the Best Anti-money Laundering Solution for Your Company
This is a guest article by marketing researcher Monica Mendoza
Financial crime remains a looming threat to American companies in the banking and finance sector. Each year, as technology advances, so do the methods of money laundering networks and the malicious agents that carry out these illicit schemes. The burden naturally falls on companies to protect their assets—and their customers—by bolstering their current anti-money laundering infrastructure and protocols. Foremost among these is the deployment of new anti-money laundering software, otherwise known as AML solutions.
But there’s a lot of new technology available on the market, and decision-makers from financial institutions who aren’t so savvy with tech may get choice fatigue just looking at options. And once a few software suites are already in the running for acquisition, company executives might be wondering:
- Is the AML solution effective, or will it simply be a cash drain on the company’s resources?
- Will the AML solution upgrade the company’s AML capabilities and AML compliance, or will it simply serve as an ornament to legacy and infrastructure and protocols?
- Is the AML software worth its salt? Will it equip the company with needed skills to combat money laundering in the digital age?
When looking through AML solutions and choosing which one to integrate with your company’s current tech stack, don’t be afraid to ask hard questions like these. Being critical about the type of software you’re acquiring will increase your chances of getting better at AML and staying compliant with regulators. Once you’ve invested in the right solution, you will immediately see improvements to your company’s preparedness for extreme situations. It will take you one step closer to being the ideal financial company—one whose vision of transparency and security your customers can believe in.
To that end, here are the six most important steps you should be taking when choosing new software. Learn which AML solution is the best fit for your circumstances, and so that you can deploy it as soon as possible.
Choose an AML solution with essential features
The first question to ask pertains to the characteristics of the AML solution. Though many AML software packages that are out in the market today function similarly, it’s important to note that no two solutions are alike. Upon closer inspection, one may be a better investment overall than another.
As a decision-maker for your company, your task is to learn what exactly a solution is capable of doing. Ultimately, that will help you choose the most effective AML software to fight financial crime.
If you need help narrowing down the key characteristics of a good AML solution, here’s a quick checklist of qualities to look for:
- use of artificial intelligence instead of a strictly rules-based system, to discern anomalies and unusual patterns in financial transactions
- exceptional data management capabilities
- superior analytics and reporting features
- ease in maintaining and updating the software
- a comprehensive and future-ready digital platform
If your chosen AML solution demonstrates these qualities out of the box, that’s a good sign. A piece of software with all these characteristics will bring the fastest return on investment to your company and show its mettle in the fight against financial crime.
Upscale your actual AML abilities
The next question you should ask is whether this software will be able to change your company’s whole AML approach for the better. Do you envision your company’s AML compliance officers working at the same pace with the new software while using the same methods they’ve always used? If the answer is yes, then it’s highly recommended that you look for a more advanced solution to snap your AML compliance team out of complacency.
The need to upscale your actual AML abilities, instead of merely acquiring software to retain your level of AML proficiency is an urgent necessity indeed. Today’s money laundering networks have become even wider in their reach and are much more sophisticated in their methods. That means that the traditional rules-based approach to AML is not enough. If your company will simply rely on weeding out false positives from real threats using a manual system, you will be vulnerable to a massive attack sooner rather than later.
That said, the right software solution should not only upgrade your AML abilities but also inspire an even better allocation of time and human resources at your company. Don’t settle for software that allows you to perform at your current level. Instead, aim for a solution that will improve your performance. This is for the sake of your company and your customers. The more modern-day knowledge and proficiency your AML compliance officers have, the safer your company will be from scandal and financial failure.
Make sure it can analyze anomalies and patterns in them
For the solution to enhance your ability to detect legitimately suspicious activity, it should do more than help you sort false positives from legitimate cases. It should help you identify significant anomalies, patterns, or relationships in customers’ behavior that may indicate something more worrisome.
One of the keys to forming a holistic and forward-thinking AML strategy is paying closer attention to your customers. It would be extremely difficult to draw accurate conclusions about money laundering activities based on flagged transactions alone. The answer may lie in upscaling your customer due diligence abilities so that no customer with dubious identification documents gets onboarded. In case a malicious agent still enrolls in your system, an AML solution can still help you flag behaviors, transaction amounts, or relationships that are out of the ordinary.
In summary, your AML software should allow you to analyze pattern-based or relationship-based money laundering risks on a greater level. An AML solution worth its salt will also help you formulate a proactive—and not a reactive—approach to money laundering. With it, you and your staff should be able to read the writing on the wall and strengthen your AML operations before something catastrophic actually happens.
Don’t settle for less
The fourth question you should ask has to do with the accuracy of the AML software. How often can you depend on it to report suspicious behavior? What degree of accuracy should you expect from an AML solution, even if you are just a small or mid-sized financial company?
The correct answer is that you should expect accuracy all of the time, regardless of your company’s size. Just one money-laundering scandal is enough to damage public trust in your company for a long time. That effect will take its toll on you whether you’re still building a good reputation or are already considered an authority in your industry. Truly, both big and small financial institutions should be able to depend on their AML software for consistent protection of their assets and financial data.
The ideal AML solution will boast solid data management capacities, extensive analytics, and detailed reporting as part of its core. It should draw from a data lake whose integrity you can trust and should run real-time analytics to assess current money laundering threats. Taken together, those qualities will make your AML solution a reasonably accurate predictor of alarming behavior. This, in turn, will give your company a fighting chance to respond the right way, at the right time, to money laundering.
Consider the cost of ownership
Your company’s budget shouldn’t be ignored when it comes to purchasing new AML software. After all, financial institutions have to be very careful about managing their expenses and making hefty purchases. Therefore, it’s perfectly reasonable for you to ask what the cost of ownership for a new AML solution is. It’s also good to think about whether owning the software will be a gain for your employees’ productivity or a drain on your company’s finances.
Though buying AML software may be expensive at first, the right solution will ultimately save your company a lot of money. For one, it will keep you from becoming the target of money laundering activities. Additionally, it will reduce costs for manual labor on AML activities by virtue of its automation technologies and bolstered business efficiency.
Once you and your compliance team have spent time with a good AML solution, you’ll realize just how rewarding the tech upgrade can be. You’ll be expending much less money on labor and overhead for AML activities, especially during the crunch before a regulator’s visit. With the best AML software, you’ll see the difference in your company’s financial statements and you’ll ultimately be glad that you were thorough in making your investment.
Look for streamlined regulatory reporting capabilities
The last question you should ask is on behalf of the people you work closely with in your industry: your regulators. Given the seriousness of financial crime in the current climate, regulators are now more demanding of stringent AML measures from those they supervise. While they also remember financial institutions that are conscientious and organized with their AML reporting, they also note the companies that are found to be lacking in this regard.
Upgraded AML software will make the task of compliance easier and put your company in the good graces of regulators. The ideal solution should contain features that streamline AML regulatory reporting, such as templates. It should also have a platform to help you manage compliance data for every global jurisdiction your company operates in. A trustworthy AML solution should make you agile in your compliance work and help you and your team beat every compliance-related deadline. With the software at your disposal, you’ll be less nervous and more optimistic every time a representative calls your institution to discuss compliance-related matters.
Ultimately, the goal should be for you to project an image of responsibility and financial transparency on the part of your company. The outputs that you’re capable of with a good AML solution will show your commitment to AML best practices—which is something you’ll want to be known for in your industry.
For as long as the brains behind the operations exist, money laundering will continue to be a challenge for big and small financial companies. But with the right technology, companies can gain the upper hand over money laundering networks and protect themselves and their customers from financial crime.
Consider putting yourselves a step or two ahead of money launderers by purchasing new AML software. Just remember: An investment as big as a new AML solution for your tech stack deserves some careful thought. Think of everyone who will be affected by the integration of new software—your staff, your regulators, and your customers—and choose wisely.
Monica Mendoza is a writer and marketing researcher based in Manila, Philippines. She spends a lot of time studying how technology continues to transform lifestyles and communities. Outside the office, she keeps herself busy by staying up-to-date with the latest fashion trends and reading about the newest gadgets out on the market.
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