Changing with the (financial) crimes: Embracing the paradigm shift in modern AML screening programs

The complex world of financial crimes compliance is witnessing a significant shift towards more versatile and effective anti-money laundering (AML) screening technology capabilities, reflecting the need to adapt to this dynamic landscape.

Chief compliance and risk officers face multiple AML screening challenges such as ensuring precise data, maneuvering through regulations, and making sure risk mitigation strategies remain relevant and valuable. Data-agnostic approaches, enriched workflows, and monitoring capabilities are becoming more crucial to increasing productivity and prioritizing AML alerts.

The data-agnostic approach to AML

At FinScan, we understand that every organization has unique compliance screening requirements. In a market where most vendors offer limited third-party data options, our screening solution integrates with all the leading high-risk databases. As a result, compliance and risk officers are empowered to make their own choices when it comes to data sources.

By using a screening solution that integrates with all the major providers, organizations can select the high-risk sanctions, watch lists, and politically exposed persons (PEP) database that best fit their needs. Other data sources, such as adverse media or internal block lists, should be easy to integrate as well, enabling true flexibility in the organization’s choice of risk configurations for the various aspects of AML screening or KYC verification.

Improved match quality with precise data

Effective AML screening hinges on the quality of the underlying data. Misaligned or inconsistent data can lead to significant challenges in identifying true risks, potentially resulting in compliance breaches, penalties, and reputational damage.

Modern AML solutions enhance data and match quality by standardizing and optimizing data sets for more accurate matching, potentially reducing compliance analysts’ workload. For example, a typical FinScan implementation reduces the number of false positives by threefold to eightfold while uncovering confirmed sanctioned hits – and in competitive benchmarks, finds accurate hits other solutions miss.

By choosing a vendor with a strong foundation in data quality, compliance and risk officers can ensure the data sets they use for AML screening are primed to optimize matching and help minimize money laundering and terrorism financing risk.

Global standards in payment message screening

According to the World Bank, 57% of adults in developing economies made or received digital payments in 2021, compared to 35% in 2014. The channels through which criminals operate continue to widen as digital payments expand and geopolitical risks intensify. In fact, banks cited increasing geopolitical risks as the top external trend driving increased financial crime compliance costs.

Essential for organizations dealing with international financial transactions, the processing of cross-border payments has become a focal point in AML compliance, particularly with the adoption of the ISO 20022 payment message standard. Advanced AML screening solutions now aim to provide real-time processing of these transactions, identify and block high-risk transactions, and minimize false positives.

Technology providers that support ISO20022 payment formats and are Swift Alliance-certified can natively process cross-border payments and block risky transactions in real time.

Advanced workflows and monitoring

Compliance and risk officers want flexibility in determining the most critical alerts when prioritizing their workloads. A market-leading platform’s workflow capabilities can allow companies to sort alerts by various attributes, including risk score, match strength, source application, resolution status, customer type, and screening date. Reporting capabilities enable them to meet audit requirements, including detailed documentation of configuration settings and audit logs.

A paradigm shift in AML screening

The advancements in AML screening technology mark a significant shift in AML screening and compliance. By offering improved data quality and adherence to global payment standards, modern solutions are set to play a pivotal role in enhancing the efficiency and effectiveness of AML programs.

Organizations also want greater flexibility in implementing their AML programs, including choosing AML data providers, managing workflows, and adhering to the latest payment standards of ISO 20022.

As the landscape of financial crime continues to evolve, adopting versatile, data-driven AML solutions will be critical for organizations seeking to navigate the complexities of compliance and risk management in an increasingly interconnected financial world.