AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

7 Steps to Automate and

Accelerate Your AML
Compliance Process

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Table of Contents

Introduction: The Continued Rise of Money Laundering // 1

Challenges of Current AML Technology and Processes // 3

Creating a Competitive Advantage through Improved AML

Technology and Processes // 5

Fraud.net’s End-to-End AML Solution // 9

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Introduction: The Continued Rise of

Money Laundering

The United Nations’ Office of Drugs and Crimes estimated worldwide

money-laundering at USD$2 - $4 trillion. As with many estimates of
financial crimes, this amount is likely understated.

Automating your anti-money laundering (AML) processes with an AI-

74%
based solution reduces your cost of compliance and false positives, and
improves your effectiveness in preventing money laundering. Financial
institutions need to take decisive actions against the growth in money
laundering to strengthen and accelerate the process through upgraded
technology, enhanced processes, and better utilization of internal and
Of survey third-party data. Fraud.net’s AML solution helps financial institutions
respondents prevent financial crime and money laundering with automated screening,
filed more SARs risk management, and continuous monitoring.
in 2020 than
2019 Globally money laundering is on the rise; while COVID has exacerbated,
it was surging before the pandemic. Money launderers are increasingly
global in their reach, better organized, and technically savvy. They count
$10B on a lack of communication between banks both in-country and across
borders.
Global AML
penalties in Money laundering’s cancerous effect on financial networks and society
2020 can not be overstated. Governments continue to try and address the
threat with increasingly strict, multi-layered AML regulations.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

In our brand-conscious times, financial firms need to avoid

having any whiff of a relationship with organized crime, terrorist
groups, child exploitation rings, or other criminal syndicates.

A perception of explicitly or implicitly helping these perpetrators of financial crime will stain an
organization’s brand, reputation, and impact their entire operations.

According to a survey by Fraud.net’s partner, ComplyAdvantage, 74% of the respondents

questioned filed more SARs in 2020 than in 2019. Governments and their regulatory authorities
have continued issuing significant fines for institutions not in compliance. Last year, penalties
related to AML exceeded USD$10 billion globally, an 80% increase over the prior year.

If AML compliance is not adequately monitored, a financial institution’s reputational risk can be
severely impacted, along with their bottom line. Below is a sampling of recent hefty fines issued
by US federal and state regulators:

Goldman Sachs had Bank Hapoalim was Capital One was hit
fines of $3 billion fined $900 million by with fines of $390
related to bribery US authorities for their million for failure to
schemes involving involvement in a tax- report thousands of
Malaysia’s 1MDB evasion conspiracy and suspect transactions.
corporation. a money-laundering
scheme involving bribes
and kickbacks with FIFA.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Challenges of Current AML Technology

and Processes
For North American financial institutions, the cost of managing AML and related compliance
activity rose 33% in 2020 to over USD$40 billion. AML processes are often homegrown, frequently
“cobbled together” with manual activities and outdated technology. Too often, AML activities are
only performed periodically due to inefficiencies in processes and competing priorities.

Traditional organized crime groups continue to utilize layering and advanced bookkeeping
maneuvers through “shell” businesses. However, money launderers are increasingly becoming
more diverse, including:
• Organized money laundering networks that act as an outsourcer for other criminals
• Cyber-criminals
• Human, drug, and arms traffickers
• Terrorism financiers

Though their crimes of choice may have evolved over the years, the launder’s tactics have had
seismic shifts. They are increasingly:

Large global Setting up Taking Deploying Utilizing

criminal e-commerce advantage trade- virtual
syndicates sites to pose of advanced based currencies.
working across as legitimate technologies laundering.
countries and online stores such as AI.
continents. or payment
providers.

ComplyAdvantage’s recent survey of financial institutions

revealed some interesting findings regarding AML processes:

93% 69%
of surveyed respondents felt stated improving fraud
real-time AML risk data would detection was the highest
improve their compliance priority involving AML
effectiveness. compliance.

Improving technology, and the management and utilization of

AML related data were the top focus areas for 2021.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

The core issues faced by many financial institutions regarding their AML compliance process include:

01. Outdated IT infrastructure

As large banks are inevitably part of multiple mergers, it results in a myriad of
systems, many of which are often outdated. The legacy systems become difficult to
upgrade and integrate with new technology.

02. Legacy systems and processes are unable to keep up with new forms of
money laundering
Criminals are going to keep moving away from the light of scrutiny. With their
technological sophistication, complex operating structure, and knowledge of the
schemes most scrutinized by banks and authorities, they constantly seek new tactics.

03. Siloed and difficult to access data

Outdated systems create another major issue for institutions - data that is difficult to
access. Analysts often must resort to manually compiling data to perform analysis.
The siloed data makes it difficult for comprehensive analysis and utilization of AI and
other advanced methodologies.

04. Senior leadership not providing effective risk management and oversight
The tone set at the top regarding risk management and oversight is cascaded
throughout the organization. Management failing to place the necessary stewardship of
risk management and instilling a culture of control is often the root of problems related
to AML, data breaches, and other fraudulent activities.

05. Lack of collaboration

A defining change in money laundering plots is the increasingly global nature of fund
movement. Criminal networks utilize intricate laundering schemes to move money
across countries. But banks are often hamstrung by not sharing AML-related data.

06. Over-reliance on bank’s compliance and risk personnel

While the compliance and risk teams are crucial in detecting money laundering, they
should not be the only personnel watching for signs of money laundering. When
front-line employees and others outside of the compliance and risk teams are not
providing support in highlighting potential cases, a knowledgeable and available
resource is wasted.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

WHAT ARE THE BIGGEST Creating a Competitive

FINANCIAL CRIME PAIN
POINTS? Advantage through Improved
The ComplyAdvantage AML Technology and Processes
survey found:

Increasingly sophisticated and organized money

laundering schemes are requiring more robust detection
40% and monitoring capabilities.

of organizations have
Your financial institution needs to transform its perspective on
combined their AML, AML compliance. Mindsets need to change from a compliance
cyber, and fraud and task orientation to creating opportunities for competitive
areas.
advantage.
Their most significant
pain points involving
An AI-powered AML platform can improve your team’s
financial crime efficiency, lower the cost of compliance, reduce false positives,
data were: and enhance the customer experience.

The following are seven decisive actions your financial

institution needs to take to improve, automate, and accelerate
42% your AML compliance process.

1. CREATE A STRONG GOVERNANCE FRAMEWORK

Compiling
Global Data
The core of a KYC/AML program is a formal and strong
governance structure. Your leadership team needs to take an
active involvement in AML risk management, and to ensure
31% the compliance, risk, and audit teams are carrying out the
necessary reviews and providing on-going updates on status.
Relevancy
and Correct The governance framework needs to include:
Categorization • Quantification of your institution’s risk exposure.
• Ensure the control environment around AML policies and
procedures is sufficient and being followed.
• Oversight of the monitoring systems and guidelines to
28% efficiently and timely alert teams to anomalies.
• A control feedback loop to continually corroborate
Out of Date the AML algorithms are working as required, cases are
Data properly expedited, and false positive levels are closely
watched.
• The on-going alignment of investment and resources
based on risk levels.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Siloed data not only gets in the way of timely and

effective AML analysis, it also makes it difficult to
manage virtually all aspects of cybersecutiy and risk
management.

2. CONSOLIDATE FINANCIAL CRIME-RELATED SYSTEMS, DATA, AND PROCESSES

Coinciding with the need for AI/ML in your AML compliance process is the requirement to
consolidate your financial crime data. Siloed data is the bane of timely and effective AML analysis.
Amalgamating your financial crime data brings benefits beyond AML - including fraud prevention,
cybersecurity, credit risk, and other areas.

Consolidating and augmenting your data provides a 360-degree view of potential financial crime
transactions, customers, and counterparties. Removing data silos also provides you with the
opportunity to consolidate people, processes and technologies, and realize the inherent cost and
time savings.

WHAT IS THE IMPACT

Streamlined Case Improved Risk
OF EFFECTIVE DATA
management Assessment
CONSOLIDATION?

Unifying your systems

results in a cascade of Actionable Stronger
improvements: Analytics Governance

Data
Unification Better
Effective Data Reporting
Orchestration Accuracy

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Estimates are that about 95% of rules-based flagged

transactions are false positives in the first review
95% stage. The direct cost alone of reviewing false positives
is in the billions; adding the indirect and opportunity
cost of the wasted resources and time is staggering.

3. DEPLOY AI/ML TO QUICKLY DETECT ANOMALIES

For a more efficient, automated, and highly effective AML compliance process, utilizing AI/ML
models is a necessity. With machine learning, a model can offer forward-looking detection of
anomalies. No longer are you relying on individuals to analyze reams of data to detect a possible
issue. Your analysts can now focus on the alerts driven by the system to reduce backlogs, errors,
and creating more timely identification of potential money laundering.

Additionally, AI models can provide your organization the ability to perform entity analysis to
discover relationships across entities, including counterparties and beneficial owners. Analysts
can then look further into the connections to better understand the laundering schemes and
entities involved. AI models can also provide your teams with visualization of elaborate ownership
assemblages.

4. REDUCE FALSE POSITIVES WITHOUT INCREASING FALSE NEGATIVES

In traditional rule-based AML models, the simplicity leads to large volumes of false positives.
Whereas AI/ML models are proven to reduce these numbers dramatically as they are much better
equipped to detect anomalous behaviors and transactions.

AI-based models can support your financial institution through the entire cycle, from the KYC
processes to monitoring of transactions and entity relationships.

5. DYNAMIC UPDATING OF CUSTOMER PROFILES

Data is the spotlight required to detect and visualize money laundering conspiracies. With the
need to perform near-continuous reviewing, all applicable internal and external data is necessary
to employ dynamic updating.

Complementing AML, a perpetual KYC program is becoming the norm to stay ahead of the money
launders. Your AI-driven system needs to be capable of updating customer profiles every time
there is a material change based on internal and external sources.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

6. SECURELY AND ANONYMOUSLY

SHARE DATA WHAT ARE THE BIGGEST
AML COMPLAINCE PAIN
The continued global growth and complexity of POINTS?
money laundering requires new approaches.
A Deloitte survey in 2020 revealed the following
One of these approaches is the trend of financial regarding respondent’s primary AML compliance
institutions to share applicable information, challenges (multiple choice question):
including:
• Entity information, across banks and 62%
jurisdictions.
55%
• Anonymized AML model performance for
new insights on criminal behaviors and their 51%
48%
patterns.
• Collaborating throughout the compliance
41%
value chain - KYC, sanctions screening, adverse
media, PEP, and other elements.

This collaboration is critical as the criminals In Ad Co To

re crea tra equ wi mp
In
m o
continually maneuver money across banks and or suffi
en gula sed ine at r th lia
n o c an
yf
fo to d ely equ mu ce ut ien als
countries. Whether it is global financial institutions rc ry
em ex
en pe
AM
Ls
i l t
re i-j
m ur
en isd
d a te
d
t ep
os
t a t e
or large government agencies, none have complete t o tac
f r tio
eg ns
ff ts ict
i o na
ch
no
l
itiv
es
ula a o
visibility to money laundering structure. Sharing tio nd
ns
l gy

information offers your firm the ability to better

understand the structure of the schemes to help
detect and stop money laundering.

7. DEVELOP A RISK-AWARE CULTURE

Creating a risk-aware culture that involves all relevant employees, not just the compliance, risk,
and audit teams, provides your company a more formidable first line of defense. Leadership must
create an environment that encourages raising possible issues and asking questions.

Improved technology, increased collaboration, and more involved governance are the way forward
to help your financial institution enhance AML compliance and stem money laundering. AI/ML
technology and other improvements will automate and accelerate the process, thereby lowering
the cost of compliance and improving the program’s overall effectiveness.

Building a risk-aware culture also requires keeping your employees aware and updated
regarding AML on a regular cadence:
• Management needs to lead and ensure employees take part in tailored AML training.
• Training needs to be scheduled regularly to aid in retention. Too many financial
institutions only provide employees with the training as part of onboarding.
• Providing regular compliance training not only helps cover ever-changing updates to
tactics and regulations but instills the importance of AML compliance.

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 AUTOMATE AND ACCELERATE YOUR AML COMPLIANCE PROCESS

Fraud.net’s End-to-End AML Solution

We support dozens of bank’s KYC/AML compliance processes, including identity screening and
monitoring, and transaction monitoring. Our solution offers clients automated screening, risk
management, and continual monitoring in their detection and prevention of financial crime and
money laundering.

Fraud.net’s software provides seamless onboarding, and automated AML screening and
monitoring, including:

Customizable Risk Screening - Screen against global sanction, adverse media, PEPs,
and other lists.

Automated Customer Onboarding - Spot more risks and reduce false positives.

On-going Monitoring - Receive tailored, proactive alerts to rapidly spot suspicious

behaviors.

The Fraud.net solution delivers integrated screening and monitoring capabilities across the
customer lifecycle from onboarding to reporting. Plus, you have the flexibility to write rules that
match your institution’s requirements for checking if the applicant, customer, or counterparty’s
name appears on any sanctions or watchlists.

Your organization can also customize queries to include specific lists, fuzziness, and match types,
including sanctions, PEPs, and adverse media. Additionally, you can achieve a more robust fraud
data set by being part of a large data consortium through our Collective Intelligence Network.
Lastly, our solution is strengthened by our partnerships with ComplyAdvantage and Jumio.

With Fraud.net’s AML solution, your financial institution

gains the following benefits:
• Reduced False Positives
• Fully Automated Monitoring
• Global Coverage
• On-demand Screening
• Flexible Search Options
• Seamless Integration

Our AML solution offers your financial institution a

comprehensive, flexible tool that delivers intelligent
automation to make your AML process more efficient and
cost-effective. Contact us today for a free demo.

LEARN MORE

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