Overcoming the Pitfalls of Disparate AML Compliance Systems

November 29, 2019

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 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....
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