AML Regulatory Technology:

How can technology support effective decision-making?

Anti-money laundering compliance is all about data crunching, or in other words an anti-money laundering compliance framework evolves around data analytics. Whether it is a business risk assessment, a customer risk profile, transaction activity or geography risks – data is at the forefront to enable informed decision making.

Conducting data analytics relying purely on human resourcing is slow and labor intensive – pushing up costs of business operations. In simple terms, reliance on human resourcing alone is inefficient and cost intensive.

AML Compliance – AML Regulatory Technology

Regulatory Technology or RegTech for short, can quickly organise data sets and extract information. This allows AML compliance officers and senior management to focus their resourcing in areas that require their professional expertise. Often, however, AML compliance frameworks lack the agility to accommodate the increasing pace of technological developments. It is therefore timely for business owners and Board members to increase their knowledge on the benefits of digital transformation. Continuing to operate with manual, labour intensive processes will not only push-up operational costs but will also leave an organisation vulnerable to fractures across its compliance program. Heads of Risk Management need to acknowledge no team of people can operate as efficiently as technology. What might take a compliance team hours to achieve can be completed within seconds with RegTech.

Why therefore is there such a slow transition for businesses to move to RegTech? Is it fear of the unknown or simply adversity to change?

Leveraging the benefits of data-driven technology

An organisation that relies on technology for data driven processes has an upper-hand on their competitor that is reliant on human resourcing. However the success of data-driven technology can only exist when the data collation is reliable. Once data is confirmed as ‘clean’, technology automates the processing of analysis and reporting.

As anti-money laundering compliance is dynamic with risks moving all the time, any solution requires sufficient flexibility to enable AML compliance officers to drill-down on the data and attain new knowledge.

Cloud based technology

One of the greatest benefits of Cloud technology is the low costs and fast implementation. Businesses can access AML compliance software without needing to develop or take responsibility for ongoing updates and maintenance of their own technology infrastructure. The other benefit is costs are only attributed to the resources that the business requires. If they require additional resources, it is as easy as turning on a switch.

The Covid pandemic has increased the demand for Cloud based technology. Businesses that were forced to continue operations remotely with employees working from their private residences quickly discovered problems with their business continuity plans.

As Cloud technology is a web-based solution, it allows employees to collaborate and manage work processes, regardless of their location.

Automation in AML compliance

Regulatory technology allows data-driven processes to be automated. This allows businesses an opportunity to further streamline their work flows. Data automation enables staff to focus on those tasks that require advanced levels of human judgement. It means that businesses are leveraging the benefits of their highly-skilled staff.

The way forward with AML technology

By adopting AML RegTech solutions, organisations can transform compliance into a competitive advantage. By using appropriate RegTech tools, businesses can detect, mitigate, and prevent harmful risks. An AML compliance solution will typically notify the employees when suspicious activities are detected so they can be handled promptly. The speed in which suspicion is managed or a weakness remedied is crucial because firms are often judged on how quickly they respond to such events.

AML RegTech solutions help cut costs and effort (time) associated with compliance. By making the compliance process simpler and cheaper, organisations can spend more money and energy in other areas.

Manual processes are fraught with issues. Often staff are working in silos and lack knowledge of the current status of any particular compliance action. Sophisticated AML technology that crunches data and generates reports, ensures that management can evidence-compliance.

AML RegTech such as money laundering risk assessments, is redefining the future for financial services. New digitisation technologies are changing the way risk management and regulatory compliance requirements are addressed and delivered.

Businesses that are slow to respond to the digital evolution operate at a higher risk of harming their brand and facing regulatory action.