Fighting Money Laundering in the Face of AML Budget Constraints

When it comes to anti-money laundering (AML), compliance is a cost center for financial institutions and budget pressures are the norm. This begs the question: “How can institutions hold the line on costs while demonstrating their support for AML compliance?”

This is a dilemma currently faced by many chief compliance officers (CCOs). Whether facing budget cuts or just trying to keep up with growth while holding the line on budgets, they are being forced to solve for competing interests. For the business, they must manage costs and improve profitability. To meet growing regulatory expectations, they must spend even more money to run an AML program that can manage their risks.

As a result, many CCOs find themselves in an untenable position as they juggle all the above in the face of personal career, financial and reputational risks. While it is their responsibility to implement an effective AML program, how can they do so without an ever-increasing AML budget?

Lawyer Monthly Magazine recently reported on a study that says most financial institutions are trying to comply whilst at the same time facing budget cuts of up to 25 percent.

It’s no wonder that the same study notes that 76% of professionals in the industry say that compliance has become a check-the-box exercise that is getting in the way of tackling the true source of money laundering. This is supported by the fact that it is estimated that more than half (57%) of money laundering remained undiscovered over the last year.

The dangerous consequences of AML budget constraints were thrust into the spotlight as recently as last year when the story broke of a banking executive who was fined $450,000 for AML lapses. The executive, who oversaw the bank’s AML compliance department, was assessed the civil penalty by the Financial Crimes Enforcement Network (FinCEN) for his role in the bank’s prior compliance breakdowns.

The bank was fined $185 million in 2018 for violations of the Bank Secrecy Act. This stemmed from a lackluster AML program that allegedly allowed numerous risky currency transfers to slip through the cracks. According to FinCEN, the bank didn’t dedicate enough resources to its program and had inadequate processes to handle high-risk customers in the early-to-mid 2010s.

This serves as a stern warning to any financial institution or CCO considering cutting corners to save on AML costs.

Compliance is not enough to solve the problem either. One in six compliance professionals surveyed say compliance is a stagnant culture. The majority say compliance isn’t getting to the bottom of the issue.

To overcome this challenge, CCOs need to be honest about their situation. They also need to look for the most cost-effective and forward-looking ways of solving their problems.

Discover the QuantaVerse AML Solutions

Historically, financial institutions have relied on ineffective rules-based monitoring systems to address the serious global problem of financial crime. However, this has led to excessive false positive alerts requiring expensive and time-consuming manual investigations, which is the last thing needed by a CCO on a tight budget.

QuantaVerse helps companies manage financial crime risks more effectively and affordably using powerful artificial intelligence (AI), machine learning, and data analytics tools. We serve up detailed, risk-scored intelligence that flips the tables on financial crime and the criminals behind it.

The QuantaVerse AML solutions have been shown to improve the effectiveness of existing AML systems while creating significant efficiencies for investigative teams. QuantaVerse offers three distinct AML solutions that reduce costs while improving efficiencies by working independently or in conjunction with each other:

• QuantaVerse False Positive Reduction – is uniquely deployed ahead of the TMS. It uses AI to clean and enhance the data associated with transactions. By supplementing transaction data, QuantaVerse hands off better information to the TMS. Without changing rules or revalidating the TMS, QuantaVerse has proven to reduce the number of false positive alerts by as much as 40%. That means many fewer alerts that must be investigated.
• QuantaVerse Automated Investigations – replicates up to 70% of the human investigative process that analyzes entities, transactions, and their intention (or economic purpose). It also scores risk related to the focal entity and counterparties and provides a comprehensive Financial Crime Investigation Report offering investigators an “at-a-glance” understanding of the case and related risks.
• QuantaVerse Advanced Detection – examines transactions for financial crime risks that a TMS has missed. The solution can query multiple years’ worth of related entity transactional data and can enable the efficient examination of transactions, including ones considered as Below the Line (BTL).

Explore QuantaVerse AI

Check out QuantaVerse for yourself by requesting a demo. In addition to giving you a quick tour through the QuantaVerse solutions, you can see how the QuantaVerse Financial Crime Investigation Report (FCIR) can streamline and accelerate your alert investigations, while making adjudication and reporting more consistent. FCIRs provide necessary supporting documentation for your AML investigators to quickly adjudicate a case, and also include auto-generated narratives needed for explaining why a case has been cleared of documenting a suspicious activity report (SAR) if required.

Contact us now for a demo: www.QuantaVerse.net.