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AML checklist: Essential features to seek in a solution for your business

By , CEO, RelyComply.
04 Mar 2024
Bradley Elliot, CEO at RelyComply.
Bradley Elliot, CEO at RelyComply.

In an era of mass digital payments and financial transactions, anti-money laundering (AML) compliance is critical for banks, financial institutions, and other regulated businesses. Technology plays a central role in any effective, intelligence-driven AML programme. But not all AML solutions are made equal.

Choosing the right AML automation and analytics software for your organisation requires rigorous evaluation across a spectrum of technology and business factors. This guide examines the key considerations and evaluation criteria to help you make the right AML software decision for your organisation.

1. Ensure the solution covers your functional needs end to end

AML software enables you to efficiently execute and automate the fundamental processes mandated under AML and counter-terrorist financing (CFT) laws and regulations. You will want to find a solution that covers the following core areas:

  • Comprehensive identity verification and KYC: Know Your Customer (KYC) forms the foundation of an AML compliance programme. The right KYC and identity capabilities will ensure you have accurate insight into customer identities and risk levels from the start to apply tiered verification processes.
  • Robust transaction monitoring: Effective transaction monitoring enables you to continuously analyse customer transactions and accounts to detect potentially suspicious patterns or anomalies that may indicate criminal activities.
  • Streamlined SAR Reporting: Suspicious Activity Reports (SARs) are mandatory financial crime reports that must be filed with regulators when potential risks are detected. Your AML system should simplify this process.
  • Comprehensive sanctions screening: A good AML system should make it easier to identify transactions linked to sanctioned countries, entities, and individuals across global sanction lists issued by OFAC, UN, EU and others.
  • Risk-based assessment and scoring: A risk-based approach requires effective tools to assess and numerically quantify customer, account, and transaction risks based on your AML risk models.
  • Powerful reporting and analytics: Insightful reporting and analytics should enable data-driven AML decision-making and program optimisation with dashboards, alerts, and other tools. Look for AML software that uses advanced techniques like machine learning, AI, graph analysis, and natural language processing on top of data to take detection accuracy to the next level.
  • End-to-end audit trails: You will want complete audit trails across all system activities to demonstrate effective due diligence and compliance with regulators.

2. Look for good data coverage

The accuracy and scope of data used by your AML system directly impacts its effectiveness in revealing true risks while minimising false positives and redundant alerts. Without adequate, fully up-to-date data sources, your AML system could have critical blind spots. Look for a solution that integrates with key data sources such as sanctions lists, Politically Exposed Persons (PEPs) data, law enforcement watchlists, geographic risk data and industry blacklists.

3. Seek a fast onboarding throughput rate

The onboarding throughput rate is an important metric to consider when evaluating AML software solutions. It refers to the speed and volume at which new customers can be onboarded and have their identities verified by the AML system. Prioritise vendors that leverage automation, AI-assisted document validation, biometrics, and data services to achieve high and consistent throughput rates. For many organisations, the onboarding throughput rate can directly impact business growth and customer satisfaction.

4. Integration with core systems is key

Your AML software should provide APIs and pre-built interfaces to integrate with core systems such as your customer databases, bank core systems, payment engines, card management systems, or trade finance platforms. It should also be able to draw transaction data from all relevant channels – wire transfers, checks, ATMs, credit/debit cards, mobile payments and more. This enables the seamless passage of data between your AML system and other key applications to feed risk detection workflows.

5. Keep pace with regulatory change

Adhering to evolving AML regulations is the primary driver for investing in an AML system, so you need the confidence that your system will keep you compliant across the jurisdictions where you operate as regulations change. Your vendor should quickly incorporate new sanctions/watchlists; altered suspicious activity thresholds and limits; additional due diligence, reporting, and audit trail requirements; and support for new data standards like ISO 20022 for global bank transfers.

Take control of your AML software

Selecting the right AML software solution is a multifaceted decision with critical technology, operational, and regulatory factors to consider. The ideal partner provides more than just piecemeal tools – it offers an integrated end-to-end AML platform spanning identity verification, transaction monitoring, risk scoring, case management, and reporting.

Crucially, a flexible best-of-breed solution also integrates seamlessly with other systems you already have in place, rather than rigidly mandating an all-or-nothing rip-and-replace approach. This enables you to augment existing investments while benefiting from purpose-built AML capabilities that maximise accuracy, efficiency, and automation.

By choosing a partner that becomes an extension of your team, with configurable solutions tailored to your environment, you’ll strengthen the foundations of your AML software to confidently tackle the challenges of financial crime head-on. This will enable you to simplify AML while keeping one step ahead of an evolving regulatory landscape.

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