The stakes have never been higher for financial institutions to have consistent and compliant anti-money laundering (AML) reporting as federal banking agencies continue to increase their supervisory focus, enforcement actions, and monetary penalties related to BSA/AML laws.
For context, the chart below shows the dramatic increase in filing of SAR reports by financial institutions since they were introduced in 1996.
The Top Issues Facing AML Teams Today
Financial institutions continue to be caught between a rock and a hard place as they work to remain compliant but also effective in a world of increased regulatory expectations and limited resources.
Julie Conroy of Aite Group reinforces this point in her 2015 AML Vendor Evaluation:
AML violations: This simple phrase, with its associated baggage of brand damage and hefty fines, instills fear into financial institutions’ C-suites. The job of Financial Institutions’ AML officers is often a thankless one, as they are caught between regulators’ ever-increasing expectations, finite resources (and a dearth of available talent for hire), and the new specter of personal liability and even criminal prosecution for severe AML violations.
In fact, according to a survey conducted by ACAMS and Dow Jones Risk & Compliance, the top three issues facing AML teams in 2015 included:
Increased regulatory expectations,
Having enough properly trained AML staff
Insufficient and outdated technology
How to Accomplish Consistent and Scalable AML Reporting
At the root of all three challenges is the need for consistent, scalable reporting and processes. Here are three ways to achieve consistent reporting in AML:
1) Automate to Ensure Accuracy
For many firms collecting, validating, and reporting on AML data is a tedious and often manual exercise making the processes susceptible to errors and inconsistencies. Automating data gathering, validation, and reporting processes can help to reduce risk and improve accuracy from a regulatory perspective.
2) Systemize Reporting and Training
One of the biggest issues facing the AML industry is the ability to ensure consistent, high-quality reporting in the face of mounting alerts and finite resources. Financial institutions should employ a combination of technology and process to address these heightened reporting and persistent training needs.
3) Avoid Black Boxes
Answers alone from your analytic and case management systems should not be taken at face value. In addition to subject matter experts and trained professionals, technology that can explain the analytics performed “under the hood” and provide traceability back to the system of record will become the AML team’s ally as regulations and technological sophistication continue to increase.