Financial Services
Tech revolution: A deep dive into AML compliance technologies
Anti-money laundering (AML) compliance is one of the key cornerstones of the financial services industry that ensures integrity and security within financial institutions. Apart from regulatory mandates, anti-money laundering solutions offer a crucial barrier against ever-evolving financial crimes that continue to threaten the economic landscape across the globe.
Traditionally a labyrinth of manual processes and extensive paperwork, the tech revolution has continued to transform the AML compliance landscape and bring efficiency, accuracy, and speed into AML workflows. But how is anti-money laundering technology helping streamline AML compliance workflow and overcome compliance challenges?
Understanding AML compliance and challenges
The concept of AML compliance refers to a collection of policies, procedures, and tools that ensure compliance with strict legal and regulatory guidelines while combating financial crimes – like terrorist funding, money laundering, and other financial crimes. AML compliance requires financial institutions to monitor transactions, identify and report any suspicious activity, and take necessary steps to deter criminal activity.
Reliant on extensive manual processing, extensive paperwork, and significant human intervention, traditional AML compliance faces significant challenges when it comes to:
- Manual data handling
- Resource-intensive and time-consuming processes
- High costs
- Inefficiencies in meeting the regulatory burden
- Susceptibility to human errors
AML technology and anti-money laundering services are playing a crucial role in overcoming these challenges and revolutionising AML compliance to help the financial services industry keep up with globalisation and technological advances.
The need for AML technology
Apart from overcoming the challenges of traditional AML compliance practices, modern anti-money laundering solutions are also playing a crucial role in regulating the ever-evolving global financial landscape. Some factors highlighting the need for AML technology and software include:
- Evolving criminal threat
- Political pressure
- Unsustainable compliance costs
- Outdated AML compliance methodologies
Financial criminals are continuing to exploit technological advances and digital banking solutions to evolve financial crime typologies, necessitating an agile approach to AML compliance.
Global political powers are pressuring regulatory bodies to identify and eliminate any legislative loopholes to eliminate any vulnerability to money laundering or other economic crimes.
With the total global AMC compliance costs reaching $206 billion, approximately 70% of global financial institutions have reported an increase in AML compliance costs over the last year.
The siloed effect of outdated compliance practices has made it difficult to keep up with innovative money laundering techniques.
Stuck between regulators and criminals, AML practitioners need to embrace AML technology to stay agile and keep up with the evolving financial threats with the help of AML software.
Top AML technology trends to look out for in 2024
As the complex AML landscape continues to evolve, technological advancements are transforming AML compliance. In light of regulators and authorities continually updating the compliance requirements, here are the top AML technology trends that can help fight against financial crimes.
Artificial intelligence (AI) and open-source intelligence (OSINT)
AI technology is playing a crucial role in modern anti-money laundering solutions, helping analyse patterns in large data sets and detect unusual transaction data. Additionally, AI and OSINT also play a key role in transforming the onboarding process, assessing customer risk levels and flagging high-risk customers early for timely intervention.
Cryptocurrencies
Cryptocurrencies – and blockchain technology – are becoming increasingly popular to ensure secure and decentralised peer-to-peer transactions. In the AML compliance context, cryptocurrencies have become popular for nefarious purposes as they are easy to use, difficult to track, anonymous, and bypass AML regulations for traditional transactions. However, regulators are taking increasing interest and actions to monitor, regulate, and counter cryptocurrency-related financial crimes and AML technology needs to follow suit.
Cloud computing
Cloud computing has changed the way different business operations rationalise and consolidate data from multiple systems and sources. Not only does this make it easier to securely store and analyse AML data but NLP and AI capabilities of cloud computing solutions can also aid in calculating and assigning risk scores. This can simplify onboarding, transaction monitoring, and risk assessment processes for enhanced AML compliance at a fraction of the cost.
Robotic process automation (RPA)
Automated RPA solutions can help streamline high-volume regular AML tasks – including data entry, transaction processing, suspicious activity investigation, and client screening. This can make AML compliance more cost and time-efficient while freeing up AML analysts or AI tools to focus on more complex investigations.
Intelligent automation (IA)
Combining the capabilities of RPA, AI, and ML, intelligent automation allows anti-money laundering solutions to simulate human intelligence and rely on analysis of real-world information to make reasoned judgments and reach a well-informed decision. AI can help transform AML compliance by ensuring efficient data collection and faster decisions while helping investigations by automating large parts of data processing and analysis, increasing AML efficiency, and preserving transparency.
How can Infosys BPM help?
Leveraging the right anti-money laundering services is crucial for modern financial institutions to safeguard their customers’ assets and avoid regulatory penalties. With service offerings like
- Transaction monitoring
- Watchlist filtering (for politically exposed persons, adverse news, and sanctions)
- Sanctions screening of payment investigation in real-time
- Remediation support
Infosys BPM can help you leverage next-gen technology and modern anti-money laundering solutions to transform your operational models, improve business performance, and standardise AML compliance processes while optimising costs and resource allocation.
