by Computer Services, Inc. (CSI)
Now, more than ever, achieving a 360-degree view of customers is essential for optimized and effective anti-money laundering (AML) compliance. Financial institutions, including banks, investment firms, and insurers—and the services they offer both retail and corporate customers—have grown in size and complexity in terms of lines of business, products offered, delivery channels, and regional and global footprints.
In addition, the rapid expansion of e-commerce, digital lifestyle services, and other online services is driving growth in online and in-app transactions and other new modes of transferring funds, introducing an entirely new realm of financial activity.
And, in response to stricter regulation and more effective AML programs at financial firms, money-laundering techniques have grown in sophistication in order to elude detection.
The complexity and reach of modern-day financial services provide the perfect terrain for money-laundering schemes that use any combination of multiple customers, accounts, products, financial firms, and regions. The rapidly expanding ecosystems of e-commerce and online financial services provide even more opportunity for moving and cleansing illicit money.
To avoid being the unwitting host of schemes involving tainted funds, financial institutions and online services alike must be able to follow the money by tracking customer and account activity across the enterprise. They must also be able to assess the overall risk posed by customers who hold multiple accounts, as well as the risk inherent in networks of linked customers and accounts.
Holistic AML compliance, then, should capture a consolidated and coordinated view of customers and activity across lines of business, products, and regions, including state and—for multinational institutions—national borders.
Barriers to Holistic AML
At many firms, AML technology and operations are decentralized and organized by line of business or geography. This siloed approach to compliance is a serious barrier to achieving a holistic, 360-degree view of the customer for risk assessment purposes.
At the same time, most firms do not have the appetite for full-scale, rip-and-replace projects in order to build these enterprisewide capabilities. Moreover, smaller financial institutions are challenged to implement sophisticated capabilities in an affordable and manageable way.
Given such challenges, many firms are focusing on adding strategic components to their compliance stack in order to efficiently achieve enterprisewide AML compliance. The following program components help support a holistic approach to AML:
- A centralized method of building customer risk profiles
- Real-time screening to support faster onboarding, same day payments, and digital services
- AML and anti-fraud programs integrated at the enterprise level
- Advanced technologies such as machine learning to reduce false positives and support dynamic risk profiling
Implementing enterprisewide AML can be an effective way to overcome limitations of legacy compliance solutions, while at the same time supporting AML compliance operations in today’s rapidly changing financial landscape.
To learn how your institution can implement an airtight AML compliance program, read the full white paper, Achieving Holistic AML, from CSI, in partnership with Celent.