What should AML compliance look like in 2021?
As the digital commerce landscape changes with the times, how can our AML programs keep pace?
2020 was the year that changed the digital landscape forever. As the world descended into lockdown and brick and mortar commerce came to a halt, the online marketplace and financial services flourished. One downside of that advancement, unfortunately, was a marked jump in cyber crime.
A seismic shift like that obviously calls for a step-up in compliance measures. So, what changes should be made to our current AML/KYC systems for them to withstand the new challenges?
Robust Information sharing
In the first half of 2020, the Netherlands Transaction Monitoring (TMNL) project was given the green light. This project is one of the first of its kind, with a vision for multiple banks to jointly monitor their transactions in a single utility.
TMNL is a first-of-its-kind private company established by the five largest Dutch banks—ING, ABN Amro, Rabobank, Triodos Bank, and de Volksbank (the "Founding Banks"). TMNL will work closely with Dutch financial regulators and law enforcement agencies to curb money laundering through "faster, better, and more complete detection of money laundering and financing of terrorism."
If the project proves to be successful, experts believe it will most likely be replicated in other countries, perhaps even other industries besides banking.
Extensive adoption of biometrics
Asking a customer to walk into a branch to present documentation or paperwork has been difficult, if not impossible over the last several months. As a result, digital onboarding and remediation has become the norm and biometrics will increasingly play a big part in this. Hopefully 2021 will see the continuation of adoption of facial and voice recognition as a way of identifying and verifying customers.
Earlier this month, Jumio, a company that provides selfie biometric checks to numerous companies in telehealth, financial services, online gaming and social media, has secured an unprecedented $150M investment to expand. A huge vote of confidence has been cast and it is sure to echo across all industries currently hurting for remote KYC options.
Faster adoption of new technologies
With customer behaviours changing, financial criminals are evolving their tactics, too. Take, for example, the rise of virtual currencies in circulation. This can prove to be a breeding ground for money launderers, who can more easily slip into the financial system and remain hidden.
These new entry points can fool traditional rule-based systems. Thankfully, AI and machine learning can come to the rescue. With new AI/ML-based AML systems businesses will no longer have to rely on what a human thinks a cyber crime looks like, but what an intelligent machine flags based on historical behaviour, pre-analysed patterns and anomaly detection.
Secondly, as AI technology becomes more human, the need for human confirmation becomes less pressing. AI will empower, not replace human investigators, enabling them to react more efficiently and speeding up many aspects of AML, not least customer due diligence, which represents the lion’s share of money laundering cases.
But what seems to be the greatest advantage of AI/ML compliance is its revolutionary ability to keep businesses 100% up to date. For example, when you’re using a PEP / Sanctions scanner tool like DataSpike, its AI-powered search engine learns from the searches themselves and continuously enriches its database.
Overall, 2021 is shaping up to be a challenging but exciting year for compliance. If you’re looking to step up your AML game, digitalization should be your best bet in whichever form you choose to integrate it.