Financial criminals are continually becoming more sophisticated in their money laundering methods and operating within increasingly complex networks. As a result, anti-money laundering (AML) regulations and enforcement actions are more stringent, hitting financial institutions (FIs) with large fines when money laundering risk has been missed.
Great strides are being made around the world to clamp down on financial crime. However, FIs continue to struggle with ineffective AML systems and manual processes, requiring huge compliance teams and unsustainable costs. The good news is, emerging AML solutions are better than ever at improving compliance with AML regulations. By identifying suspicious activity more intelligently, FIs will be better equipped to detect and mitigate financial crime risk.
AML Regulations and Guidance Across the Globe
The past few years have seen a rapid rise in regulatory pressures across the globe. While countries face diverse business environments and challenges, AML regulations and compliance standards provide a framework to build effective systems to help combat money laundering.
In 2019, the Wolfsberg Group released global guidance on AML efforts in its Statement on Effectiveness. The guidance recognized that no two FIs are the same and each financial crime program should specifically focus on whether its efforts are effective in achieving the overall goals of the global AML risk management regime.
The European Union’s AML Directives are used as a mechanism to harmonize legislation across its member states and is now on its fifth iteration. 5AMLD introduced new legal requirements for cryptocurrency and beneficial ownership. In the U.S., FinCEN’s CDD Rule enforces legal entity beneficial ownership identification and verification, applying substantial customer data requirements on FIs.
Against this backdrop, governments around the world are more aggressively enforcing current regulations to expose dangerous entities, persons and political regimes. FIs must keep pace with the developing AML regulations and should consider opportunities to utilize new technologies to enable more effective and efficient financial crime detection.
Failure to Comply with AML Regulations Result in Significant Fines
Enforcement actions and penalties for non-compliance with AML regulations have been increasing. In 2019, there were 58 AML penalties globally, totalling US$8.14 billion, – double the number of penalties in 2018. Consequences for FIs failing to meet AML regulations include harsh fines, reputational damage, diminished market value and loss of consumer confidence.
In April 2019, NYDFS, New York County (Manhattan) District Attorney, U.S. Department of Justice, the Federal Reserve, Office of Foreign Assets Control enforced one of the largest fines to date of $1.3 billion for failures in sanctions controls.
Other recent enforcement actions include:
Many enforcement actions cite AML control deficiencies including:
- Ineffective risk-based frameworks and monitoring systems
- High rates of false positives
- Lack of internal sanctions controls
- Insufficient resources devoted to alert investigations
- Incomplete or missing customer and transaction data
- Inadequate reviews and reporting of suspicious activity
By investing in new AML compliance technology, FIs can automate lengthy manual processes, better detect suspicious activity by reducing false positives and improve the overall analysis of risk.
Innovation Meets AML Regulations
Historically, AML regulations have restricted FIs from experimenting with new and emerging technologies. However, as regulators have recognized the benefits of technology in combatting financial crime, they have been working closely with FIs to improve AML risk management.
In the UK, the Financial Conduct Authority (FCA) has pioneered several initiatives including collaboration between technology and compliance experts to discover actionable, technology-driven solutions to help combat AML compliance challenges. Similar collaborative tactics have been emulated by other regulators around the word such as the Monetary Authority in Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) establishing vibrant innovation ecosystems.
In the US, numerous regulatory agencies are launching pilot programs and other broad initiatives to push for innovative approaches and exploring new technology that can effectively and efficiently combat money laundering and crime. By implementing innovative approaches to AML, FIs will be equipped to efficiently comply with AML regulations and optimize AML monitoring and investigations systems to enhance financial crime detection and mitigation.
Adapting AML Systems to the Evolving Regulatory Landscape
Every day, we see new financial crime threats and AML regulations will continually evolve to protect the world from financial crime. FIs play a huge role in preventing financial crime. New and emerging technologies can help improve AML risk management by delivering greater intelligence, more focused risk analysis and coverage, and more effective and efficient AML systems.
You may be interested in…

Why You Need A Holistic View of Integrity Risks Within The Supply Chain
Businesses that support organizations through their supply chain face a growing number of risks. Learn how Decision Intelligence can help.

How to Achieve Growth & Manage Risk with Real-Time Customer Insights
Discover how forward-thinking organizations are deploying new technologies to create a dynamic, contextual understanding of their customers.

The Quantexa Community: Where Customers and Partners Can Learn, Share and Collaborate
Find out more about The Quantexa Community, a global professional network built to bring Quantexa users together.

Quantexa Opens State-of-the-Art Technology & Analytics Hub in Malaga
Quantexa has opened the doors to its Technology & Analytics Hub, set in the very heart of Malaga’s thriving Tech Park. Learn more today.

It’s Time To Upgrade Your Early Warning Signal Systems – Here’s How
Find out why risk managers are turning to CDI technology to provide more accurate early warning signals that anticipate risk changes earlier.

How to Build Additional Context into Your Machine Learning Algorithm
Learn how building additional context into your machine learning algorithm can help your organization detect risks at speed.
Related Solutions

Tax Authorities
Reduce the tax gap, identify fraud and non-compliance, and operate as efficiently as possible with limited resources.

Anti-money laundering
Reveal hidden risks and detect criminal activity faster. Reduce false positives to manage the cost of compliance. And improve investigations to make faster and more consistent decisions at scale.

Customs Agencies & Border Control
Contextual Decision Intelligence enables faster decisions, increased revenue collection and enhanced compliance. The Quantexa platform enables Customs and Border agency teams to analyze data successfully, automate and accelerate decision-making, and achieve improved results.

Fraud
Identify potentially fraudulent activity by looking at people or transactions in isolation. Understand the context surrounding the organizations you do business with to make fast, accurate decisions.

Fraud, Waste & Abuse
Empower your team with the best tools available for today’s challenges to identify and prevent fraud, waste and abuse with contextual decision intelligence software.

Credit Risk
Understand your customers, their business structures and supply chains. Make better lending decisions, faster. And support digital risk transformation.

Customer Intelligence
Generate a complete view of the context around your customers and prospects to build better relationships, reduce attrition and find hidden opportunities.

Revolutionize Your Financial Crime and Fraud Detection

Investigations
Enhance the efficiency, effectiveness and consistency of your operational and complex investigations to empower your teams to expose and understand risk faster.

Master Data Management
Connect all data—internal and third party—to create a joined-up, contextual view of all the relationships between your customers and every other domain.

Compliance
See how we help to reduce costs and improve coverage for financial crime compliance.

CDO
See how our platform uses contextual analysis to turn data into a high value asset.

CIO
See how our platform uses financial crime technology to enhance your existing IT ecosystem.

Healthcare
Reduce the tax gap, identify fraud and non-compliance, and operate as efficiently as possible with limited resources.

Contextual Monitoring
Reveal hidden risks and detect criminal activity faster. Reduce false positives to manage the cost of compliance. And improve investigations to make faster and more consistent decisions at scale.

Unified CRM Solution

Know Your Customer
Reduce significant manual effort across onboarding, refreshes and remediation. Automate checks, implement continuous monitoring, and focus on contextual decision making.

Growth and Retention

Contextual Engagement
Generate a complete view of the context around your customers and prospects to build better relationships, reduce attrition and find hidden opportunities.

Data Management
Connect all data—internal and third party—to create a joined-up, contextual view of all the relationships between your customers and every other domain.

Connected Customer View
Generate a complete view of the context around your customers and prospects to build better relationships, reduce attrition and find hidden opportunities.