AML Best Practices Should Focus on Proactive Detection, Not Defensive Monitoring

by Deanna Murray

An Anti-Money Laundering (AML) plan can expand based on organizational needs, but should include 6 vital components.


It is estimated global money laundering transactions are in the $1 trillion to $2 trillion range – numbers that, if measured as a country’s economy – would rank in the top 10 economies in the world. 

It is also no small secret with this heightened awareness and the fines associated with non-compliance of Anti-Money Laundering (AML) regulations, profits are taking a hit. In fact, since 2008, more than $321 billion has been paid out in fees from the finance industry alone. 

At this cost, the laser focus on identifying and resolving these issues is no surprise – as companies seek to determine what route they will take in recognizing, auditing and reporting money laundering transactions. A vital, comprehensive plan should be created to outline all of the functions of effective monitoring and the roles and responsibilities of those who are managing it.  

Effective monitoring on the risk assessment side is no longer good enough when it comes to finding liability and regulatory efficiencies. Companies can no longer play defense against money laundering crimes – they must take an offensive stance that doesn’t just evaluate risk, but identifies and resolves it before it becomes a reality.  

Taking this stance – being proactive in the AML battle – means developing an AML strategy right-sized for your organization but also flexible enough to grow with the changes and sophistication of the evolving white-collar criminal. Add to this the proliferation of technology and the profile of today’s “white collar criminal” has expanded dramatically.

An AML plan can expand based on organizational needs, but should include these vital components:

  • Risk Assessments & Methodologies
  • Internal Control Reviews & Schedule for Reassessments
  • Independent Auditing and Practice Evaluations
  • Regulatory Compliance Plans & Update Processes
  • Outline of AML Compliance Team Members & Their Roles & Responsibilities
  • Comprehensive Plan for Onboard Training & Continual Education

Once completed, the AML plan can form the baseline requirements for the very backbone of an AML program -- the AML, Risk Assessment & Compliance Team.

The need for such departments within financial institutions has made AML careers one of the fastest growing within financial services – fetching large salaries because of the complexity of compliance and the changing AML and Know Your Customer KYC landscape. AML analysts are reporting a national average salary of $50,000, compliance officers are garnering salaries in the $75,000 to $85,000 range and AML managers are pulling in an average of $100,000 a year. 

Even though demand and compensation remain steady, finding employees with the requisite knowledge is proving difficult. AML and KYC are evolving fields where compliance knowledge and the forensic accounting skills needed are a difficult combination. 

With strategies sanctioned and teams in place, it is now time to select an AML IT framework. This framework will be the nexxus of data collection and storage as well as the key piece in flagging and resolving AML issues.

When looking for an appropriate framework, keep in mind the specific needs of an organization as one-size-fits-all detection packages aren’t suited to all organizations. Be picky. Take the time to fully understand a framework’s offerings and understand its capabilities for customization.

Within the chosen framework organizations should find the functions that pull together active AML monitoring and regulatory compliance components. Successful AML frameworks take the onus of detection off of actual AML human auditors and places it in the parameters of a framework that can not only detect potential threats but process them at high volumes. 

Depending on the level of compliance monitoring necessary, these frameworks become home to AML practice perspectives, risk assessments, operational requirements, training data and enforcement toolkits. Besides being an active detection system, the framework acts as a knowledge database growing and learning with experience, newly-discovered factors and the evolution of the AML practice itself.

Many of these established frameworks can have human transactional monitoring components, but also can be armed with automated detection processes, taking money laundering transactional identification and compliance to an entirely new level of error reduction and efficiency. 

Manual AML processes, while having proven moderately effective, are estimated to only identify about half of what should be flagged as suspicious transactions. Automated processes are virtually error-free, process huge amounts of data in seconds and flag transactions based on set parameters monitored and updated via framework maintenance. 

While the release of new regulations and the evolving intelligence of money laundering criminals can seem to keep companies behind the detection curve, automated processes are simply adapted to include the new information and detection can start immediately – removing the need for additional training and employee downtime. It’s simple; in 2018, robotic process automation is reducing errors and improving processing times for monitoring tasks previously completed by manpower - freeing up high-earning AML employees to focus on more strategic aspects of program operation. 

Another valuable component of an effective AML process is how detection connects back into the original records created when a client is added to a banking system. Insight into these records, in coordination with real-time AML transaction monitoring, can create a more complete picture into potential criminal activity and satisfies the necessary customer due diligence verifications. 

Successful frameworks eliminate dual processes that might overlap versus intersect and can look at files in their totality instead of piecemeal. This integration adds another safeguard into thorough detection and closes yet another loophole previously exploited based on disparate data.

There is no doubt AML monitoring and compliance will continue to be an active and important part of the future. The question is how all industries can gain efficiencies while cutting costs in the detection processes. Establishing a clear AML plan and a framework perfectly suited to the specific needs of an organization offer up a great place to start.

Deanna Murray is the Industry Insights Manager at Digital Intelligence Systems, LLC.