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An end-to-end cloud service can make your anti-money laundering program more effective and efficient

John Edison
Global Head of Financial Crime and Compliance Management Products

Why an end-to-end anti-money laundering system is preferable to fragmented systems

Chief compliance officers at many midsized banks are under pressure to support ambitious growth plans, meet heightened expectations for customer experience, and assess transaction patterns that have changed due to COVID-19 – all while meeting the same compliance and performance standards as large banks. These pressures can be challenging to navigate, and not only because midsized banks often have fewer resources than large banks. They are also challenging because of the fragmented nature of anti-money laundering systems at many midsized banks.

Why do so many midsized banks have fragmented AML systems? This situation can arise because of many factors. For example, while undergoing a lengthy merger, a bank may need to maintain existing systems to ensure appropriate coverage. After the merger, a bank may decide it’s easier to keep the two systems from the merged companies instead of shifting everything to one system. Beyond mergers, fragmented AML systems can arise if the bank requires different AML systems to talk to different parts of its core system. Or perhaps point solutions are added over time - to handle new regulations, products, or high-risk businesses - because they seem to be the easiest path.

Unfortunately, fragmented anti-money laundering systems eventually create a variety of problems. When data resides in different systems, it becomes difficult or impossible to achieve a 360-degree customer view. With no centralized case management, investigations become less efficient, and investigators may not see key insights. Plus, the bank must invest significant resources, including model validation and infrastructure upkeep, to meet compliance requirements for multiple systems. Finally, there are IT issues, such as longer implementation cycles for changes and updates, when fragmented systems don’t talk to each other. There is also the possibility the bank may fall behind in innovation as it becomes more challenging to adopt new tools and technologies when so many resources must be dedicated to supporting multiple systems.

Chief compliance officers at midsized financial institutions often wish to streamline their anti-money laundering systems to increase efficiency and effectiveness across their AML programs but don’t know where to start. For instances such as this, I suggest using a single, end-to-end, cloud-based software as a service (SaaS) that delivers all essential functions of AML compliance (Know Your Customer, Customer Screening, Transaction Monitoring, and Regulatory Reporting).

It’s important to remember that having one system shouldn’t be done just for the sake of having one system. It needs to provide better results and do everything you need it to do. But the right “anti-money laundering as a service” can help chief compliance officers centralize and streamline:

  • Data to improve the accuracy of risk scores
  • Scenario management for better scenario design, tuning, and backtesting
  • Case management for a single customer view and more efficient investigations
  • Process management for faster setup, more automation, and deeper insights
  • The number of vendors the IT department must manage, minimizing time and effort spent managing integrations and staying up to date with various roadmaps

What to look for in an end-to-end anti-money laundering cloud service

How can chief compliance officers achieve the benefits listed above? Here are a few key elements to look for in a best-in-class cloud service for anti-money laundering:

1. A single browser user interface for your entire AML team: Look for an AML cloud service that provides everyone on your team with a single, easy-to-use browser user interface – this means fewer clicks for everyone. The service should enable:

  • System administrators to quickly set up your data pipeline and have a centralized view of integration points into different data sources
  • System administrators to have IT operational insights at their fingertips and let them manage upgrades with ease
  • AML managers and analysts to configure user roles and workflows easily, automate processes, design custom scenarios, access a catalog of pre-built scenarios, and perform threshold simulation, tuning, and backtesting
  • Users to make highly configurable codeless changes as policies, best practices, and regulations evolve

2. Centralized case management and a common data model: With centralized case management and a common data model across all your AML applications, an AML cloud service can provide a holistic view of each customer or counterparty and a 360-degree view of their risk. The benefits of centralized case management extend beyond risk assessment. Efficiency is improved while it helps streamline approaches across teams and drive collaboration for more rapid investigations and faster decisions, especially if it provides the ability to work on multiple cases and break out of a linear case workflow.

3. Feature complete with extensive use case coverage: An AML cloud service will allow fewer customizations than an on-premises solution. Thus, an AML cloud service must be feature-complete and frequently updated so that the inherent lack of customizability is a small sacrifice.

An end-to-end anti-money laundering cloud service can help mitigate the regulatory burden

Switching to a new anti-money laundering system is a big decision for any chief compliance officer. The potential increases in effectiveness and efficiency must be weighed carefully against the time and effort invested in getting institutional buy-in for the new system. But given that 63% of community bankers recently cited regulatory burden as their biggest BSA/AML concern (far outpacing concerns about costs and risky customers), a new, end-to-end cloud service that significantly improves overall AML effectiveness and efficiency may be well worth it.

Please message me to learn more or join the conversation by commenting below.

For more information, please visit:
Oracle Financial Crime and Compliance Management Solutions: oracle.com/aml
Oracle Financial Services: oracle.com/financial-services

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