In her latest blog, Mariola investigates three key issues faced by financial crime compliance professionals – and asks what role technology can play in helping to overcome these challenges
The chilling statistics reveal that around 1% of Suspicious Activity Reports raised by compliance teams result in convictioni. This leaves offenders to strike again, and leaves victims (against whom the offences have been committed), unappeased.
Unfortunately, this is just one of the issues making the role of the financial crime compliance professional a tough one…
Issue one: the false positive burden
Anti-money laundering compliance professionals are often overloaded with false positive alerts. However, despite approximately 90% of alerts being falseii, each must still be investigated with speed and diligence.
For the compliance professionals themselves, the issue goes deeper than the threat of a fine. For many, the ability to spot and prevent instances of crime is crucial to their job satisfaction. And, in an environment where missing something or not investigating an alert quickly enough might mean instances of crime are slipping through the net, the regulator’s judgement is even more meaningful.
Issue two: the internal stereotype
Unfortunately, some operating within the financial services industry consider their compliance departments to be a cost centre, or even an obstacle to growth. This is no doubt a source of frustration for the compliance professionals themselves, because their role in fact has the potential to help organisations make good business decisions.
Although businesses are eager to secure sales and reduce friction in the buyer journey, in a world where sophisticated criminals look like legitimate businesses, having a compliance team that can sort the good from the bad is essential for de-risking new opportunities and enabling long-term business growth.
Issue three: operating in a world of constraint
Many global regulators encourage banks to responsibly implement innovative approaches to meet their anti-money laundering compliance obligations. However, some banks lack the confidence to utilise the latest technological approaches available to them. Criminals, on the other hand, do not operate in the realm of such constraints. What’s more, there is no-one to scrutinise their decisions, and they are free to go where the intelligence leads them.
How technology can change the state of play
- Freedom from the burden of repetitive or low value-add tasks: the use of intelligent technology to automate certain tasks can enable compliance professionals to work more creatively. Machine learning, for example, can improve detection rates and free up the workforce to be more proactive and inquisitive.
- Switching from reactionary alert work to holistic analysis: when compliance investigators are provided with simple to use, flexible, scalable and holistic technology, they can work intelligently to combat financial crime.
- Supporting the customer experience: regulators are advocating the use of advanced technology such as digital customer on-boarding and CDD risk scoring. Being able to effectively risk score customers in real time during the on-boarding process not only helps banks weed out the bad, but it also provides exceptional customer service for those who are genuine in their intentions.
The journey from mission impossible to tech-savvy super heroes
While the need for an intelligence-led approach to compliance is clear, the journey there isn’t always simple - it requires a shift from tactical volume, value and velocity monitoring for suspicious activities, to a more strategic and subjective assessment of threats, vulnerabilities and consequences.
At BAE Systems we continue to invest in our technology and offer a wide range of services with full awareness of the challenges faced by the industry. Our technology is already helping compliance teams around the world switch from working on seemingly impossible missions, to become tech-savvy financial crime fighters. If you’d like to find out more about our experiences, please get in touch.
Meet our expert
Mariola Marzouk CAMS, CITF - Compliance Product Manager
Mariola manages the BAE Systems Compliance product line and has years of experience as an anti-financial crime strategist. She holds a Masters in Forensic Accounting and is currently working towards a Doctorate in Criminal Justice.Find out more
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i In 2018, Europol reported that the precision in detecting criminal fund transfer was only about 1% - From suspicion to action – converting financial intelligence into greater operational impact (Financial Intelligence Group, Europol, 2018). The European Parliament has also recognised that just 1.1% of criminal profits get confiscated – Criminal proceeds: making it easier to freeze and confiscate across the EU (European Parliament News, 2018)
ii Based on a report issued by PwC, 90-95% of all alerts generated by transaction monitoring systems (TMS) are false positives – From source to surveillance: the hidden risk in AML monitoring system optimisation (PWC, 2018)