Financial crime continues to be a concern even among banking institutions that have embraced digital transformation. Just as regulatory bodies are continuously refining and improving their guidelines to deter and detect criminal activity, financial criminals are also developing methods and technologies to bypass the security systems that banks and financial businesses have set up. This is an issue not just for global players but also for midsized financial institutions, many of which depend on anti-money laundering (AML) software provided by off-premises application services providers.
The flexibility and scalability that a midsized banking company enjoys from relying on cloud-based AML software shouldn’t come at the price of security. Embracing a more open and decentralized operational framework is essential at this time, but banks still need to step up on their efforts to make their businesses less prone to falling victim to financial crime. Often, this is done by upgrading the midsized bank’s AML solution to one that can detect, investigate, and report financial crimes more effectively and efficiently. If your business is looking for an AML solution that’s suited to current best practices, make sure that the ones you’re considering include the following features:
Data management and access is still a significant issue for midsized banks, even if the amount of information they have to process on a daily basis is not as voluminous as that of global financial players. More often than not, financial transaction information is stored in silos, and this arrangement means that retrieving data and connecting the dots that bring financial criminal activity to light can be quite a challenge for many traditional banks.
A centralized investigation hub solves this issue by providing the AML team with an environment that allows them to easily retrieve contextually rich information and discover patterns of activities that reveal financial crime. From a single platform, the investigation team can search for suspicious entities, make connections between various personas and activities, and uncover layers of money laundering networks that would have remained hidden to more traditional AML software. Then, the midsized bank no longer has to rely on resource-consuming processes just to build their case or identify and report possible cases of financial criminal activity within their establishment.
A traditional AML team, one that’s more reliant on people and not automated monitoring and detection software, stands no chance against the deluge of data that their company has to process every single day. Pressed for time and pressured by the amount of work that they have to complete, the AML team may not be able to detect threats precisely, do an in-depth analysis of high-risk segments, or identify the behaviors of their transactions.
On the other hand, knowing that their target banks have an inefficient AML system can embolden financial criminals to increase their level of activity, and this, in turn, can make the banks more vulnerable to financial crime and more likely to incur fines from regulatory bodies.
An automated transaction monitoring system does away with this drawback, as it will not require AML team members to bear the brunt of the work. The AML team can set up their own watch list and feed the details to the automated monitoring system, configuring it to keep a closer eye on sectors and transactions that are more vulnerable to money laundering, terrorism financing, and other types of financial crime. At the same time, whenever they detect suspicious activity, the AML team can look into their monitoring tool and use it to identify behaviors that are common to these activities. This, in turn, allows them to reconfigure the settings of the transaction monitoring system and ensure that they are always one step ahead of the criminals that try to infiltrate their system.
Customer Due Diligence
To accommodate the current needs of their clients, many midsized banks have ramped up their efforts to digitize their services. This means that their clients can apply for various banking products from the comfort of their own homes. While this is good for customer experience, the lack of face-to-face transactions can affect how banks evaluate their customers.
The good news is that a robust AML solution can help screen applications, verify customer identity, and even assist the bank in improving the level of service that it can provide its new and existing clients. An AML solution with advanced Customer Due Diligence and Know Your Customer functions lessens the time and resources that banks need to gather customer data. Also, it gives the financial institution a 360-degree view of all the entities they transact with as well as the level of risk that each customer brings with them.
The solution can be used to streamline the onboarding process and improve customer satisfaction as well, all without compromising the level of protection that the bank can enjoy against financial criminals.
Now is a great time for your midsized bank to start transitioning to a future-proof AML solution. The right cloud-based AML solutions provider will not only offer adequate protection for your bank, it will also ensure that your business can keep up with the guideline changes that financial regulatory bodies might roll out in the future.