Money laundering legislation globally has gone through several transformations, mandating that financial institutions establish a well-defined Anti-Money Laundering (AML) program within their organizations. The objective is to identify the risks arising from both, new and existing customers besides their relationships, and monitor all transactions to detect suspicious activity.
Currently, institutions implement a tactical Know Your Customer (KYC) and AML program to safeguard their exposure, regulatory, constituent and competition-related risks. Although these programs have helped them meet the regulatory requirements, there are several challenges such as the capability of the existing AML system to detect fraudulent transactions at the enterprise-level, including processes not in line with risk mitigation.
Further, such challenges also include the following:
- Establishing a single view of the financial institution enterprise / risk across all Lines of Business (LOB)
- Establishing a single view of customer risk, product usage, ratio of alert patterns vs. transactions, across LOBs
- Eliminating existing manual processes that reduce efficiency
- Inability to view the risks associated with customer / types of alerts / severity of alerts at an enterprise level
- Inability to consider risks associated with customer, type of transaction and channel across various LOBs
- Inability to apply risk-based transaction surveillance at the enterprise level
In this white paper, we discuss the building blocks of an enterprise-wide Know Your Customer (KYC) and Anti-Money Laundering (AML) program that financial institutions will need to implement to meet the changing regulatory requirements.