One frightening reality that bank executives may have a hard time accepting is that, with the advent of technology, their institutions are becoming increasingly vulnerable to financial crime.
It isn’t just an issue of money launderers, terrorist backers, and other malicious agents running rife in these times of economic precarity. Such actors are also getting even better at their game, and the structural defenses that banks may have used against them in the past are no longer sufficient. When all that is added to the general difficulty of modernizing a bank’s anti-money laundering (AML) system and meeting the demands of its AML regulators, protecting an institution against financial crime seems like a weighty task indeed.
But on the issue of keeping your bank’s assets safe from the taint of criminal activity, there’s no way to go but up. With every year that passes, your bank should be able to strengthen its AML compliance, case management, and transaction monitoring processes. The goal is to evolve faster than criminal agents’ methods and to make sure that your data and monetary assets remain safely out of their reach.
Below are four challenges that you should overcome to be at an advantage when combating financial crime. Address these issues now and avoid the risk of being permanently compromised by criminal activity.
The Limitations of Your Current AML and Financial Crime Compliance Management Systems
You may not realize it, but one of your biggest obstacles to forming a full response to financial crime is your legacy AML compliance system.
If it’s been a long time since you updated your bank’s tech stack for AML functions, your institution is particularly vulnerable to threats. Savvy criminals can take full advantage of slow, siloed-off, delay-ridden, and case-congested AML structures. Indeed, these malicious individuals can wreak significant damage to a bank by exploiting an outdated system’s weaknesses.
If you want a fighting chance against financial crime, it’s in your best interest to upgrade to a consolidated AML solution that runs on the cloud. Having an overarching platform for AML will get your bank up to speed in terms of real-time transaction analytics, visibility over your customer enrollments, and coordination among stakeholders in your AML investigations. Upgrade as soon as possible so that there’s little legroom for financial criminals to move around in.
Increasingly Complex Schemes from Money Laundering Networks
The second challenge that you must address is your understanding of how money laundering networks and other criminal rings currently operate.
Too many banking execs still envision financial crime to play out just like it does on TV: in an obvious and predictable manner. But in truth, most criminals have adapted their methods to be even more sophisticated and undetectable to the naked eye. Over the years, they have become even better at covering their tracks and disguising their movements to look like those of legitimate customers.
An institution cannot be too complacent about keeping up with criminal trends and connecting its systems to the news, international watchlists, sanction lists, and lists of politically exposed persons (PEPs). You and your team should stay on your toes and pay careful attention to any anomalies that occur in your system—not only for individuals but also for patterns or webs of suspicious customer behaviour.
Inefficient Approaches to AML Case Management
A third issue that may stand in the way of nipping criminal activity in the bud is your bank’s piecemeal approach to AML case management and investigation work.
If your bank relies on a case management method of simply segregating the false positives from cases of legitimate concern, it could spell your financial institution’s doom. In the long time that it takes to review individual cases and flag them one by one, you may have already been significantly compromised by the false negatives.
Because of this, make it a point to rethink your AML case management strategy to be quicker, less overwhelmed by congestion, and more efficient with your investigators’ attention. Again, there’s value in employing a pattern-based crime detection system and training your staff to look at both cases of concern and webs of suspicious activity, as certain cases in these groups may ultimately be related. This approach will also help investigators zero in on cases of alarm and resolve them with greater speed and accuracy.
Deficiencies in the Audit and Compliance Trail
It’s never easy to keep a paper trail for AML audits and other efforts toward full financial crime compliance. That said, it’s housekeeping work that banks urgently need to do. Without organized and updated systems for tracking AML governance and transparency, a bank will stay in the dark about just how effective its AML system has been over the years. Needless to say, it may falter when it’s time to submit to its regulators—or, worse yet, when actual criminals come knocking.
Your bank shouldn’t be remiss in compiling its documentation work and keeping financial crime compliance reports. Be up to date about the performance of your AML system and which aspects of it require technological or operational improvement.
Bolstering Your Bank’s Defenses Against Threats of Financial Crime
Steering clear of financial crime shouldn’t be a matter of luck for your bank. You must be purposeful in your efforts to strengthen its defense against criminals and its compliance record with your regulators. Even if you don’t envision your institution as an easy target for criminal networks, you never know when they may attack. What matters is that you’re prepared and that your assets are sufficiently protected when—not if—your bank becomes their next target.
Aduragbemi Omiyale 
Modupe Gbadeyanka