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Reducing the Friction from Transitioning to Modern AML Systems

By April 23, 2021

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Do you find that your compliance team has started getting bogged down by having to manually crosscheck positive hits for instances of money laundering, only to find out that these hits were false positives? If so, you’re definitely in need of an upgrade to your anti-money laundering (AML) system. Modern pattern-based systems will take a lot of the guesswork out of your client onboarding process, allowing your team to focus on tasks that are more worthy of their time and effort.

However, every change in a workflowfrom something as mundane as rearranging an office’s physical layout to something as complex as implementing new softwareis sure to ruffle a few feathers, especially at the start of the implementation. With regard to software upgrades, this initial friction is most likely to occur with the primary users of the new system. On the one hand, they may sorely need the upgrade. On the other hand, they’re likely to have become set in their ways and will now be forced to devise a new way to do things.

If your bank is looking to upgrade its AML systems to align with compliance AML best practices, you’ve come to the right place. Here’s how you can reduce the stress associated with onboarding a modern AML system:

Determine What You Need First

Not all system upgrades are created equal. In most cases, banks looking to upgrade their AML systems already have one in place and are simply in need of an update to their current system. On the other hand, if a software vendor’s product has been deemed inadequate by regulatory bodies or the bank’s internal compliance team, then that’s the time to find a new vendor for the system.

Both options have their own considerations that must be weighed against each other. For example, an update for an already implemented software might seem like a simpler, more attractive option. However, it may not always be available or even easy to execute. If your bank’s team has taken the vendor’s software and customized it heavily to their own purposes, an update to the system could invalidate all those customizations, requiring users to recalibrate their workflows from scratch. Meanwhile, switching to a product that is more aligned with current-day AML standards may be a huge financial and managerial undertaking, but could save both the bank’s reputation and its bottom line.

Integration with Current Data Structures

Your bank’s data foundation is arguably one of the most valuable assets it controls. For most banks, it’s the starting point for many crucial operational decisions. Who to sign as a client, who to extend lines of credit to, and many other operational choices are determined by a bank’s data pool. As such, failing to account for the data foundation may not only become a likely source of friction but could also seriously compromise the bank’s entire operation.

Before embarking on your system upgrade, determine what modifications, if any, will need to be made to your data foundation. You should also make sure that the system itself is fully equipped for data provisioning in relation to your existing data foundation. This means that any presets, rules, or ETL provisions need to be preserved between your previous system and your newer, updated version. This holds true regardless of whether you’re updating your current system to a modern version or refurbishing your AML software completely.

Accounting for Past Standards, UX, and Workflows

Updating your systems is one of the best ways to ensure that you remain compliant with current-day AML standards. That said, this does not mean that you have to completely disregard older features that may still be relevant. For example, some behavior detection rules regarding AML are likely to remain unchanged no matter how many iterations and updates your system undergoes. Make sure these are accounted for in your new system.

The same also applies to user interface or user experience (UI/UX) builds, and the workflows that are informed by these. Ideally, your new system should attempt to mirror your previous one as much as possible, with provisions for user-determined changes and customizations to the interface. This will help team members reestablish a workflow that’s familiar to them while also integrating the new software into it.

Will you elect to modernize your systems by installing an updated version of your current AML software?  Will you scrap the applications you have and move to an entirely new ecosystem? Whichever route you choose, bear in mind that there are no one-size-fits-all approaches to AML systems integration, as each bank will have its own unique requirements. 

As a result, complying with current AML best practices and empowering internal regulatory teams to do their jobs well will be a delicate balancing act you’ll have to master. However, being able to do both successfully could become your bank’s biggest competitive advantage. In the long run, transitioning to modern AML systems can save you from the embarrassment of being levied fines for illicit activity while also making you more attractive to top talent in the industry.

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