Over the past few years, a number of reasons have contributed to the fact that banks are facing an increasing pressure of compliance measures. Firstly, there has been an exponential increase in the volume of international transactions that have increased the risk of financial crimes by at least that much. Additionally, governments and regulatory authorities across the world have been working to establish anti money laundering regulations to target drug traffickers and terrorist financiers. This has increased the pressure on banks to implement stricter regulations.

The major problem in this scenario is the slow AML process implemented by most banks and financial services institutes. Their primary focus has been to increase compliance staff and hire as many people as possible to ensure the legitimacy of their clients and their transactions. In the US alone the number of compliance staff has increased overwhelmingly. They have duplicated compliance measures across territories that have the most inadequate controls. This also involves hiring staff to review transactions manually as well.

The Problem with Outdated Solutions

Such slow and outdated measures have led to an increase in compliance costs with financial institutes spending millions for compliance regulations. The costs for compliance could be justified if they could show any tangible results. But the fact is that manual verification procedures are painstakingly slow and have a high possibility of error. One of the major drawbacks of such programs is a high number of false positives that the system generates. Moreover, inconsistencies in reporting procedures can lead to the fact that sometimes the system ends up generating too many reports.

However, recently banks have been trying to combat such problems by looking for more technological solutions for implementing anti money laundering compliance. The FinTech arena has made a lot of headway into automating compliance procedures. They have introduced KYC and AML verification based on machine learning, AI and text and voice analytics. The best part about such systems is that they tend to cut compliance costs immensely. Such solutions can build a sustainable approach to implementing AML regulations.

Digitising the Compliance Process

Moreover, technological solutions can enable banks and financial institutes to streamline their processes. Tools like data analytics, statistical modelling and automating of procedures can enable them to eliminate the two major drawbacks of human verifications; time and the possibility of error.

They also need to strategically invest in such tech solutions that are easily available as SaaS products. Such services provide AML systems that are easily integrated into an existing interface. Analytical software can gather information through AI and machine learning processes and analyse the data for risks, political exposure and any other possible vulnerabilities associated with a person. They then allow the company to make relevant decisions at the appropriate time.

AML Verification through digital means is the most efficient way for banks and financial service institutes to automate their compliance processes. It can allow them to decrease their costs on human capital and, most importantly, streamline the whole anti money laundering process.


Lucia Adams

By Lucia Adams
who is a professional writer and blogger.

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