Financial criminals, much like the legitimate businesses that make up the financial industry, are also maximizing the impact of digital technologies on their day-to-day operations. While banking, financial services, and insurance (BFSI) institutions have stepped up their efforts to deter and detect crimes that affect their organizations, many malicious entities have also come up with novel different ways to bypass the security systems set in place to keep them out.
Now, aided by digital technologies, these criminals have also attained the capability to change, adapt, and evolve the ways they attempt to infiltrate the systems of legitimate BFSI companies.
How, then, can financial institutions ensure that their AML solution is capable of combating tech-savvy financial criminals? Here are 5 characteristics that financial organizations should look for when shopping for innovative AML products that are capable of screening and detecting modern financial crimes.
- 1 Access to Sanctions Lists and Other Sources That Can Be Used To Check Customer Identity
- 2 The Ability to Provide Top-Notch Data Management Services to the Rest of the Organization
- 3 Effectiveness in Reducing the Level of Risk to the Organization While Keeping Customers Satisfied
- 4 Provision of Intelligent Assistance to the AML Team That Is Conducting Case Investigations
- 5 The Ability to Streamline the Reporting Process and Stay Updated with Regulatory Standards
Access to Sanctions Lists and Other Sources That Can Be Used To Check Customer Identity
AML solutions use sanctions lists from various agencies and governing bodies to screen criminal entities. It’s imperative for an AML solution, then, to incorporate a sanctions screening software that is designed to check existing and potential clients against a global list of sanctioned entities. This part of the screening process will determine whether the individual or organization that is being screened serves as a front or is connected in any way to instigators or beneficiaries of financial crime.
The Ability to Provide Top-Notch Data Management Services to the Rest of the Organization
Sanctions lists are not the only references that AML solutions use to screen a BFSI company’s prospective and current customers. In addition to this list, financial organizations also use their databases to build an accurate picture of the people and groups that are applying for or are already using their services.
There are instances, for example, when a bank has to closely scrutinize all the transactions that a customer has initiated for a set period of time. To complete this task in an efficient manner, an AML solution must provide financial institutions with a top-notch data management system that can collect, retrieve, analyze, and update customer and transaction information in real-time.
Effectiveness in Reducing the Level of Risk to the Organization While Keeping Customers Satisfied
The customer screening process is a BFSI institution’s first line of defense against criminals who are attempting to use their facilities or services for illegal activities. If an AML solution can successfully detect financial criminals before they can access an organization’s system, then it can significantly reduce the level of risk assumed by the business.
On the other hand, though, employing a stringent screening process for all customers can cause onboarding delays. To avoid this issue, financial institutions must employ a prioritization system that can determine which clients will require closer scrutiny from those who only need to go through the regular KYC and CDD processes.
Provision of Intelligent Assistance to the AML Team That Is Conducting Case Investigations
Once a suspicious entity or activity has been detected, a financial institution must carry out an investigation to determine whether the event can be considered a criminal activity or if it’s connected to one. Conducting investigations is a resource-intensive process, and it can take a lot of time for AML teams to build their case.
A modern AML solution can be of great assistance to the investigation team if it has an AI-powered case management system that can conduct institution-wide investigations and sift through false positives. By eliminating false-positive cases, the AML solution enables investigators to focus their efforts on cases that require human judgment.
The Ability to Streamline the Reporting Process and Stay Updated with Regulatory Standards
Modern AML solutions must be able to keep BFSI companies safe from financial criminals from the moment that an organization screens its prospective clients until the end of the customer lifecycle. As such, these systems should also be expected to offer extensive assistance in creating reports that comply with the standards set by regulatory bodies.
Ideally, a modern AML solution will be loaded with prebuilt regulatory analytics, which the compliance team can use to easily generate reports. At the same time, the providers of these innovative AML solutions should offer BFSI companies automatic upgrades whenever regulatory bodies roll out changes in their requirements.
It’s no longer an option for financial institutions to simply react every time criminals change their mode of operation. To reduce their vulnerability to crime, companies need an innovative AML solution that’s designed to meet the needs of the time and evolve with it. It’s a smart move, then, for BFSI companies to scrutinize their options and see which AML services provider adheres to the current best practices and offers support for technologies that will become relevant to financial institutions in the near future.