We all know the answer when it comes to money laundering. Compliance with money laundering regulations continues to represent significant expense - and it's always rising.
Despite record profits for banks and increasing interest rates, compliance with money laundering regulations continues to represent significant expense – and it’s always rising.
More sophisticated banking Anti Money Laundering (AML) operations determine the cost of each alert to understand the transactional spend, taking the average labor cost and expenses and dividing it by the number of alerts completed each month. It’s also possible to determine the productivity of investigators by calculating an average amount of time spent on each alert per user.
Banks must review each alert generated by their AML detection system. Often times this means there are more alerts than staff to investigate them adequately. When the volume of alerts gets to this point, banks turn to hiring more employees or engaging very costly third party consultancies. New hires are rarely productive from their first day on the job, adding to the total cost of investigation. Brand name consultancies are often double to triple the expense of hiring but are productive from day one. Either way, the cost can only go in one direction: up.
AML Alert Optimisation
Throwing people at the problem works, but it isn’t sustainable over the long haul. Many banks are looking at another part of the compliance equation to trim the number of false positive alerts they receive: technology. Cutting false alarms cannot come at the price of also excluding true positive alerts – signals that, if missed, would lead to massive regulatory fines.
AML Alert Optimisation allows banks to control costs of labor by reducing false positives per detection scenario, identifying the parameters that would generate the most productive alerts. Applying this technology can significantly reduce false positives and allow investigators to focus on more complex alerted transactions, while slowing or halting the flow of low quality alerts.
Allowing power users to fine-tune each model using a graphical user interface (and no coding) puts power back into the hands of the business while allowing the technology to improve the quality of the alerts they work and reducing the overall cost of compliance.
To learn more about how BAE Systems is helping banks reduce false positives, please come to our ACAMS session in Hollywood, Florida on April 9 at 12.15pm.