Productivity and profitability: rethinking the role of AML compliance

Perhaps Samantha Sheen put it best in the recent webinar on New Dawn in Compliance

When I started in compliance, we were sort of the “abominable ‘no’ men.” We were the necessary evil in the office that didn’t make anybody any money.” 

Fact: AML compliance costs have exceeded $40 billion in the US alone and above $200 billion worldwide. Sub-fact: 58% of this cost is labor, with a 9% year-over-year growth. 

Fact: money laundering is a criminal enterprise worth an estimated $2.8 trillion annually. Sub-fact: money laundering is a crime that fuels crime and dirty money ends up funding heinous activity such as terrorism or human and drug trafficking. 

Fact: the money recovered through AML is barely 0.1% of the total. Sub-fact: that’s an ROI nobody should be comfortable with. 

So, given those facts, what can we do to turn the tide and rethink the role (and efficiency) of AML compliance? That’s the $2.8 trillion question, worth repeating in large and bold: 

What can we do to rethink the role and efficiency of AML compliance? 

To move AML from cost center to competitive advantage, we need to start with the tools. As GK,  Lucinity’s CEO put it: 

I think that we have designed a system that was very good when it was introduced. […] We have sustained that system and not really started to innovate.” 

We have the technology. From machines being able to process vast amounts of data fast, to making interfacing with technology a user experience and not a dreaded chore. 

Productivity: never send a human to do a machine’s job 

Productivity matters. And it matters especially in AML. The key to increasing productivity (which in turn lowers both cost and the rate of false positives eating up an investigator’s time) is two-fold: 

  1. Consolidate data under a single-pane-of-glass interface. When it comes to finding financial crime, analysts need to see the big picture. Criminal patterns evolve and hide behind rule-based, if-then-else coverage. 
  2. Automate data processing by relying on machine learning to efficiently evaluate and flag vast amounts of financial data. Shift human attention to areas where it can truly shine: making sense of information, making informed decisions

Banks and fintechs have the data and a conducive regulatory environment looking at behavior analysis instead of rule-based coverage. And Lucinity can give them the tools to look more deeply behind the data, to use technology that shines a light on the context of financial activities.  

And beyond turning the balance considerably in the fight against money laundering. Applying technology in such a way opens opportunities for compliance teams to contribute value to the entire business. 

Profitability: transforming AML compliance into a profitable investment 

Technology, such as the kind Lucinity has put at the core to pursue its mission to Make Money Good, can turn AML into a value provider. 

  1. Focusing on customer behavior doesn’t just reveal criminal activity. By identifying good behavior, it can also contribute to opportunities for the financial institution. Whether it’s to reward, upsell, or make product decisions, the entire organization can benefit from insights gained through AML. 
  2. The productivity tools that improve the efficiency of compliance professionals also boost morale and employee retention. Feeling a valuable, contributing member of the company can activate brand benefits and lower the total cost of ownership in a variety of ways.  

Compliance doesn’t have to be a box-checking cost center, a “necessary evil” within the business. Instead, it can be reimagined and repurposed as a valuable tool to benefit all. 

AML: your competitive advantage 

Rethinking the role of AML compliance using technology both unlocks cost offsetting for compliance and provides insights in customer data for revenue-generating opportunities across the entire financial institution. 

If you’re ready to step into the future of AML, we have a sandbox environment populated with realistic data that you can try out for free

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Cover photo by Amr Taha™ on Unsplash

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Greg Fazekas

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