Thursday, February 25, 2021
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Overcoming the Pitfalls of Disparate AML Compliance Systems

Why a Siloed Approach and Band-Aid Solutions Won’t Work

by Eric Hansen
November 20, 2019
in Compliance, Financial Services
closeup photo of broken piggy bank held together with two band aids

A compliance officer’s job can be complicated enough, but some financial institutions impose hardship by having too many disparate solutions working on the same problem. CaseWare RCM’s Eric Hansen explains why working in these compliance silos can make it more difficult for compliance pros to do their job.

A day in the life of a compliance officer is becoming more complex every year – and it’s not just because of the many ways criminals try to legitimize transactions. Some of the complexities faced by compliance officers are accidentally imposed on them by their own institution’s efforts to fight financial crimes by using disparate anti-money laundering (AML) compliance solutions.

With the myriad of regulatory obligations that exist today, many organizations have built solutions to address each unique requirement.

Many financial institutions (FIs) have automated some of these processes wherever viable. But the reality is, many of these processes remain manual in nature – such as checking for adverse media on the internet or reviewing client data from spreadsheets. This can lead to various compliance officers working in silos, processing information in a variety of systems that don’t necessarily communicate with each other.

A compliance officer may start their day by accessing their screening application, then conducting a sanctions search on the OFAC site, then moving on to a separate tool for submitting SARs and so on.

All of these processes do indeed serve their purpose of BSA/AML compliance. However, when we take a step back and look at this from a 30,000-foot view, the picture is very much fragmented.

Sitting in Silos Can Be Dangerous

In a recent discussion I had with a Chief Anti-Money Laundering Officer, she lamented that her financial intelligence unit and her onboarding teams rarely communicate with each other: They sit in separate offices, and they use distinct and separate systems. As a result of this disjointedness, her institution accepted a client for a mortgage, only later discovering this individual had a World-Check hit for various financial crimes. Delayed analysis like this is definitely a symptom of having disparate tools.

In a separate conversation, a compliance officer at a bank observed that over the years, his institution did not consider solutions until they encountered a specific problem. As more regulatory requirements surfaced, the bank would then purchase Band-Aid or add-on solutions for each particular problem.

The Band-Aid approach is problematic for a number of reasons:

  1. Efficiency – Disparate systems make it difficult for AML investigators to pull together all relevant information as part of their investigation. They often struggle with false positives and incomplete client data as they try to piece together bits of information. Consequently, they spend their time on relatively low-value activity when they ought to be analyzing, investigating and reasoning.
  2. Incomplete Integration – Separate solutions rarely communicate with one another. Unless there is an established partnership between these systems with robust application program interfaces (APIs), financial institutions (FIs) can spend a significant amount of time re-keying information between systems. And even if there is an API, something could break when there is an update on either end. The most common case is when there is no integration available at all. This leaves a gap that can only be filled with manual processes.
  3. Auditability – With the specter of compliance looming larger for financial institutions, you cannot afford to have records that are not auditable. If an institution does not have each step of their reviews documented and stored, they could face issues when it comes time for an audit or regulatory exam.

FIs have built up multiple solutions to address their various regulatory obligations but often find these tools working disparately when these tools don’t connect to one another. Technology can become a burden rather than a benefit, and moreover, the systems can fail to catch risks and keep the organization compliant.

Push for Innovation

In a recent survey by Refinitiv, Innovation and the Fight Against Financial Crime, 82 percent of respondents said they are under pressure to be more innovative, and yet 73 percent are struggling to harness technological advancements.

One of the trends when it comes to innovation is a move toward enterprise AML solutions that offer a complete picture, a single platform and an optimal process.

When the processes do work in concert, the organization can realize tremendous benefits. Some of the most tangible benefits of a consolidated system are:

  • It enables the compliance team to capture a 360-degree risk view.
  • Establishing an increased culture of compliance across the organization – resulting in engagement from all stakeholders – from the front-line all the way up to the C-suite.
  • It allows you to build out smart workflows that allow for proper escalation and case management in line with the policies and procedures of the FI.
  • It allows the FI to future-proof the system by giving it the flexibility to adapt to new typologies.

This is not a “set it and forget it” exercise. Change will happen; either new regulations are enforced, the business introduces new products or the business expands into new countries. A consolidated system gives you the flexibility to adapt with these business requirements.

Once the organization starts to realize some or all of these issues, then compliance can actually become liberating.


Tags: anti-money laundering/AMLtechnology
Previous Post

How M&A Benefits from Independent Assessment

Next Post

Former CEO of Brazilian Petrochemical Company Charged for FCPA Violation

Eric Hansen

Eric Hansen (CAMS) is a Senior Risk Specialist at CaseWare RCM. He has been consulting clients globally on matters of risk and compliance for over 10 years. Eric is a member of Transparency International, where he serves on the working group for Beneficial Ownership transparency.

Related Posts

cannabis leaf on $100 bill

The Intersection of EDD and Banking Cannabis

February 24, 2021
illustration of hand holding flashlight illuminating hidden stairs

The Corporate Transparency Act: Pulling Back the Veil

February 23, 2021
rolls of cash amid stacks of poker chips

Cashless Payments: AML and BSA Risk Management

February 22, 2021
King & Spalding: GC Decision Tree for Internal Investigations

King & Spalding: GC Decision Tree for Internal Investigations

February 19, 2021
Next Post
black and white image of businessman paying bribe

Former CEO of Brazilian Petrochemical Company Charged for FCPA Violation

Access realtime data
Addressing systemic racism in the workplace SAI Global
Dynamic Risk Assessments with Workiva
Top 10 Risk and Compliance Trends

Special Coverage

Special COVID page graphic

Jump to a Topic:

anti-corruption anti-money laundering/AML Artificial Intelligence/A.I. automation banks board of directors board risk oversight bribery CCPA/California Consumer Privacy Act Cloud Compliance communications management Coronavirus/COVID-19 corporate culture crisis management cyber crime cyber risk data analytics data breach data governance decision-making diversity DOJ due diligence fcpa enforcement actions financial crime GDPR GRC HIPAA information security KYC/know your customer machine learning monitoring ransomware regtech reputation risk risk assessment Sanctions SEC social media risk supply chain technology third party risk management tone at the top training whistleblowing
No Result
View All Result

Privacy Policy

Follow Us

  • Facebook
  • Twitter
  • LinkedIn
  • RSS Feed

Category

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Whitepapers

© 2019 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
  • Articles
  • Vendor News
  • Podcasts
  • Videos
  • Whitepapers
  • eBooks
  • Events
  • Jobs
  • Subscribe

© 2019 Corporate Compliance Insights