Anti-Money Laundering Automation: Why Every Bank Needs to Automate AML Processes

AML legislation is becoming increasingly strict. And rightly so when The United Nations reports that money laundering accounts for 2- 5% of global GDP (around US$800 billion to US$2 trillion). 

To maintain the integrity of the global financial system and ensure legal and ethical conduct, financial institutions and banks are legally required to follow anti-money laundering regulations. You should have your own AML policy in place to prevent money laundering and terrorist financing.  

These AML regulations stipulate that banks must collect customer information, and monitor and screen their transactions. Any suspicious activity must be reported to financial regulatory authorities. Failure to do so can incur huge fines and reputational damage. Not to mention the financial loss of the money laundering itself.   

As banks invest in AML procedures to monitor and investigate customers and transactions, they can reduce their reliance on manual resources and ensure compliance by automating the process.  


What is AML automation?  

AML automation uses software to flag risk-associated markers associated with customers and transactions to prevent money laundering and ensure compliance with AML regulations.  

There are different elements of AML that can be automated, including: 

- Identity verification and Customer Due Diligence (part of KYC

- AML screening and monitoring to determine risk levels using PEP screenings, sanction lists, and watch lists 

- Continuous monitoring to detect any changes to customer profiles or suspicious transactions, such as Source of Funds checks,

You can use a mix of software to meet AML requirements. Low-code automation platforms help by transforming a manual risk policy into a digital workflow, connecting silos to give a clear view of data needed for customer due diligence and continuous monitoring, as well as supporting intelligent automation that detects suspicious activity. 

Low-code automation platforms can also be used for reporting to prove AML compliance as predefined processes automatically record any actions, making it easy to track audit history.  


Why should AML be automated? 

Rather than relying on manual monitoring and prevention, it’s far easier to meet compliance and adhere to AML policies with automation in place.  

As organizations grow, they can inadvertently create data silos and fragmented processes. This means that AML monitoring can fail as duplicated or missing data can lead to false flags or even miss fraudulent activity altogether.  By creating and automating a streamlined process that gathers all information from a centralized platform, you can rest assured that any suspicious activity will be picked up.  

Additionally, a high volume of alerts can overwhelm your team if the associated processes are being carried out manually. Automation enables you to stay on top of AML monitoring, and scale the processes as your organization grows. This means you don’t have to worry about fraudulent activity, you can focus on your customers.  


Which tasks associated with AML can be automated? 

Optimizing compliance workflows – Mapping out workflows associated with AML processes provides an excellent foundation for your risk management and stipulates tasks that must be followed to ensure compliance.  

Data collection and integration – Process automation can collect data from a variety of sources, ensure it is in the correct format, and integrate it on a centralized automation platform. This eliminates silos and ensures full data orchestration and visibility to provide a holistic view of customer profiles, transactions and behaviour.  

Risk assessment and Customer Due Diligence – Automating checks against sanction lists, politically exposed person (PEP) databases, and other watchlists provides real-time risk assessments and allows banks to identify high-risk individuals.   

Transaction monitoring – Advanced analytics can be applied to large volumes of transactional data to automatically detect and flag any suspicious activities that don’t reflect the customer’s usual behaviour. These transactions can then undergo further scrutiny and investigation by the anti-fraud and legal teams.  

Enhanced data analysis and pattern recognition - Automation enables banks to analyze data at scale, helping to uncover hidden connections. This can be combined with intelligent, machine learning technology to detect emerging trends, and improve the accuracy of AML efforts. 

Audit trail and reporting – Automated processes leave behind comprehensive audit trails as all activities in the AML workflow will be logged and tracked. This ensures transparency and accountability. If your organization needs to prove compliance or provide reports, automation can assist with pulling information to document all AML activities.  


What are the benefits of AML automation? 

Better overall fraud prevention – Automation provides a proactive approach to AML by detecting suspicious transactions more effectively, minimizing the risk of fraudulent activity and by extension, the financial loss that banks incur at the hands of criminal activity.  

Reduced operational costs – Streamlining activities into automated workflows reduces the resources devoted to compliance and helps to save your organization money. Automating activities such as customer due diligence, transaction monitoring and suspicious activity reporting is more affordable and efficient than manually auditing, gathering information and reporting. Plus, you can save additional costs on staff hiring and training.  

Higher productivity – Automation can free up staff time, allowing them to focus on more complex activities. If automated processes flag suspicious customers or activities, then employees can focus on the details of individual cases and more nuanced analysis, rather than having to gather all the information first, or sift through false positives.   

Improved protection against legal consequences – Failure to comply with AML regulations can lead to severe legal repercussions, such as hefty fines, transaction limitations, blacklisting and even criminal charges. If AML processes are automated, banks can rest assured that processes are consistently applied to all ongoing activities.  

Improved customer experience & reputation – Automated KYC and CDD processes can create a smoother onboarding process for customers, creating a great first impression. And automating ongoing AML checks means that transactions aren’t slowed down by manual checks. Additionally, always being able to prove compliance helps build confidence and trust in your brand, which in turn aids customer retention and acquisition.   

Agility to adapt to ever-changing sanctions – As criminal activities become more advanced, financial regulatory bodies must adapt their regulations to ensure they aren’t outsmarted, and banks have to keep up with the pace of change. Automated workflows are easier to adapt and update to ensure banks don’t fall behind on compliance.  


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