Compliance costs have always been the core point of concern for banks and financial service institutes. There is a dire need for a fast yet effective AML software for banks. The banks in the US alone spend 23.5 billion dollars on anti-money laundering (AML) compliance, while Europe is not far behind with 20 billion dollars per year. But even with such high costs, are banks able to fulfil compliance requirements efficiently?

The answer, unfortunately, is no. Regardless of it, spending so much on compliance is not inducing satisfactory results. All over the world, banks have been penalised for over 26 billion dollars in the last decade for not implementing sufficient compliance standards. The solution lies somewhere in digitising compliance procedures.

Why Banks Need Tech Solutions for AML

As regulatory requirements for banks increase, they feel the need to increase the spending on it as well. However, spending more cannot do the trick in this matter; it’s spending smart that matters. People and processes do not matter as much as their efficiency and the ability to produce results do. The anti money laundering tools used by banks currently are manual and/or outdated. Using modern technology to build AML tech solutions can turn around the whole regulatory framework for banks.

The FinTech industry has enabled the financial services sector in a unique way. By leveraging technologies like artificial intelligence, machine learning and data analytics, they have developed AML KYC tools for banks that have brought down compliance costs to a fraction of what they used to be. Some tech tools available for AML compliance purposes include;

Risk Analytics and Transaction Monitoring Systems

AML software like monitoring systems and risk analytic tools work on the basis of machine learning and AI to monitor clients’ transaction data. Unlike outdated and rule-based systems, such tools are designed to detect and alert suspicious activities based on the client’s history and a case by case basis. It reduces the number of false alerts by a fair amount and increases the subjectivity of the whole process.

As compared to manual or legacy systems, they can improve the productivity and effectiveness of the whole process. They allow the compliance staff to spend more time investigating a case rather than finding it in the first place.

Customer Due Diligence (CDD) and Screening Software

The recently introduced Know Your Customer or KYC requirements expect banks to implement a better customer due diligence process. For this purpose, KYC/AML tools for banks are now available that can authenticate a customer’s identity through digital identity verification. Such verifications can be performed through document verifications and facial scans. AML screening software involves the scanning of a client’s name through an AML database to check if they are financially or politically exposed.

These are just two of the best solutions currently available in the market for financial institutes to streamline their AML procedures. Anti money laundering tools used by banks need to be user-friendly, quickly adaptable and fulfil the core purposes of compliance.

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