Robotic Process Automation RPA in AML KYC

The cost of adhering to AML requirements for financial institutions is growing at an alarmingly rapid pace as employees race to stay abreast of the complex and dynamic regulatory landscape.

RPA has emerged in recent years as a way to help eliminate the manual process associated with KYC thus reducing costly human errors and compliance failures. With increased pressure and scrutiny from regulators, executives are turning to RPA as a way to not only reduce the costly burden of compliance but also to boost the AML program’s overall effectiveness.

• RPA can be effective in lowering costs involved with high volume, repetitive manual tasks that are often the result of human error.The KYC and onboarding process can be greatly improved by RPA. As stated earlier the KYC and client onboarding process is fraught with potential opportunities for money launderers to game the system particularly in areas where human error is prevalent. RPA not only saves the financial institution time, effort and expenses but also produces a more effective KYC on-boarding process.
• RPA bots can assist with the account opening process by monitoring credit limits, evaluate risks associated with a client, and implement new regulations quickly and efficiently. As a result, bank personnel receives a complete picture of the client’s financial history. When bank relationship managers have literally hundreds of accounts assigned to them, it’s impossible to monitor all of the accounts simultaneously.RPA reduces the burden of the on-boarding process, identifies financial risks, and reports illicit behavior quickly thus saving the financial institution from a potential compliance failure.
• RPA compiles customer data for proper screening from multiple sources, systems, and departments. RPA can help by processing forms and adding client data to the system, thus reducing the potential for human errors. Client account data and transaction history from external and internal sources can be obtained quickly providing the banker with a complete picture of the client’s accounts and financial history. In short, RPA allows the financial institution to monitor the risks associated with opening an account for a potential client more effectively.
• Regulatory monitoring can be a challenge for employees to manually keep up with the ever-changing regulatory landscape. As a result, the FI is open to the risk of costly compliance failures from either missing out on a recently updated regulation or misinterpretation of a new policy.
• RPA can help by continually monitoring regulatory laws and quickly incorporate the findings into the FI’s AML policy. This ongoing process of collecting and processing data from both external and internal sources helps the RM to stay on top of their client portfolio and remain in compliance. The ongoing monitoring process of client behavior becomes more efficient with RPA since it’s done automatically. For example, if a client has a credit card with a financial institution and the spending behavior suddenly deviates from the typical patterns, an RPA can quickly identify the aberration from historical patterns, notify the client, and close the credit card before a fraudulent transaction becomes costly to the FI.
• RPA assists BSA officers in staying up to date on the ever-changing regulatory landscape. Spotting a new illicit scheme or a new regulatory change can often be challenging and time-consuming. Any delay in the training of BSA officers can result in noncompliance. RPA helps to prevent delays and human errors involved with when identifying illicit financial behavior. In short, RPA helps to ensure that FIs are compliant and up to date on any recently passed regulations and respond quickly and efficiently to any AML violations. Delays in filing a SAR can be quite costly to a bank. In January 2017, Western Union was fined $184 million by FinCEN whereby the institution “failed to develop and implement policies and procedures that could be reasonably expected to detect and cause the reporting of suspicious transactions that led to an unreasonable delay in filing thousands of SARs.
• RPA automates communication throughout the FI on account closures and notifications to customers. Internal relationship managers and branch managers can be quickly informed of ongoing investigations and account status updates. Automating the communication process also ensures that time-sensitive deadlines and best practices are met.