Over the last decade, the Anti-Money Laundering (AML) space has witnessed drastic and dramatic changes. The emerging developments have been largely driven by the Financial Crimes ecosystem, which according to some estimates, is now poised at $20 billion a year industry.
With the consistent advent of new technologies, the financial crime prevention eco-system tends to grow at a rapid pace, in double digits, with AML becoming one of the top 3 drivers.
Detailed below, are a set of topmost AML drivers, which are dictating compliance priorities in the immediate future.
1. Pressure between Correspondent Bank (CB) Relationships
The proactive push on the part of major global banks in ensuring that their CBs (Correspondent Banks) across the world meet minimum AML requirements have come in very recently.
However, with increased regulatory pressures, almost all major banks have started pressuring their CBs to comply AML requirement programs, so that it can be easily assessed and the shared findings utilised as a resultant plan of action during a crisis situation.
2. Convergence of Financial Crimes Compliance (FCC)
Inflection events, traits, and the lineage of financial crimes indicate its varied and diversified nature. That’s why it is the need of the hour for organisations to create independent departments for each compliance, in order to focus on an emerging threat or a crucial issue.
A risk-based framework is an evolving trend, which has been a standard regulatory, and the best practice requirement in regards to compliance programs for Financial Crimes. Mixing facts with ground reality, this framework will play a major part in the convergence of FCC roles, strategies, and technologies.
3.Enhanced AML Skills
Transformational regulatory changes, technology improvements, and evolving legal precedents have over time radically changed the requirements of compliance skill sets.
Recent studies outline the possibilities of technology integration in AML profession, which is set to undergo a paradigm shift towards data and quantitative qualifications. Gone are those days, when it was okay to have on-board a seasoned banker with solid knowledge on AML regulatory statutes. Today’s AML professionals will have to be data scientists, aware of analytics with advanced research aptitudes.
There was a time, not so long ago when hurriedly set up government bodies were assigned the task of creating an order just after a financial fraud has been perpetrated.
Regulators today are however being positioned as the primary agents of public protection, who with their stern actions are incorporating moral-politico elements in combatting money laundering and its associated terror trails.
Upcoming trends show that next-generation regulators will interact more with the public, be vociferous, and stringent in sustaining public interest as far as countering money laundering is concerned. Governments will continue to empower regulators with enhanced powers, employing them to uphold their clean image.
5. AML and Big Data Issues
The core banking segment, has for some time now, seen the advent of predictive analytics, database management, automation, transaction monitoring, screening, and data warehousing as an integral part of AML compliance.
Nevertheless, AML compliance isn’t just restricted to the adequacy of data maintained by the organisation, in fact, it also lays emphasis on how the data is being effectively processed in the case of a fraudulent activity.
In a digital banking ecosystem, outraged by Big Data influx, analytics will feature as a principal trend in answering real-time questions related to a customer KYC, its businesses, transactions, accounts, and interactions across the globe. It is positioned to play a pivotal role in AML preventive and compliance issues, in the event of a red flag incident.
Anti-money laundering compliance, in the near future, will shift its focus towards gaining a concrete perception of the data captured and generated by banks. Coupled with the convergence of financial crime compliance, all AML trends are set to centre around a big data approach.
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Author: Kishore Kapoor
Kishore Kapoor an industry veteran of 31 years in global banking technology. A Founder & CEO of eKutumb.com – World’s first marketplace for enterprise software delivery and consulting business by creating value for all of industry stakeholders involved (customers, partners, individuals and investors) through a disruptive and trans-formative approach of doing business.