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In order to strengthen the financial system against money laundering, terrorist financing and other financial crimes, the global Anti-Money Laundering (AML) and Know Your Customer (KYC) landscape has undergone significant change with increasing layers of regulations and enforcement being added across many jurisdictions. Since the financial crisis of 2008, a whole raft of new global rules and regulations have been introduced such as Dodd-Frank, MFiD, Basel, the UK Money Laundering Regulations (MLR17) and the EU’s 4th Money Laundering Directive (MLD4).

These increased obligations have meant that firms have had to increase their operational capability to enable their compliance functions mitigate the risk of financial crime. These requirements have included implementation, control and oversight over compliant AML/KYC programmes, changing processes, adoption of new supporting I.T systems and technologies, provision of full audit trails and adherence with the regulators reporting requirements.

Wherever possible, firms are on the hunt for solutions with proven capability which has accelerated the growth in AML/KYC compliance technology. Whilst these technologies have enormous potential for delivering operational cost savings and efficiencies, adoption can also cause significant disruption, including the re-skilling of staff and the requirement for regulators and legislators to keep pace with its advances. In addition, the enormity of recent fines has also contributed to a culture where failure through noncompliance is considered too high a risk to take on unproven, automated processes.

As opposed to ‘big bang’, organisations may be better served by taking a phased modular approach to innovation and new automated strategies in order to mitigate operational and regulatory risk. Investment in the right people with the requisite knowledge, skills and expertise will help regulated firms reap the benefits from implementation and in turn, maximise the return on investment. Officers responsible for AML/KYC policymaking should include rigorous multi-jurisdictional outcome testing to avoid a disconnect between drafting and actual execution.

In addition to improving your own in house capabilities, ”pay as you go” and end-to-end solutions from specialist third party suppliers should be considered as part of your overall strategy in addressing an ever increasing threat landscape.

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We understand how important effective and efficient remediation and complaints management is for a business. For all enquiries, or if you need urgent assistance, please contact us.

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