It’s not news that fraudsters are developing more sophisticated methods than ever before to launder money. But, as Financial Institutions (FIs) are working hard to remove friction from their customer onboarding processes and actively reduce face to face
customer interactions, the war on money laundering is being fought on very risky battle lines.
Efficiency of ML prevention processes
The victors in the fight against money laundering are those that analyse huge volumes of data quickly – identifying problems early and meeting regulatory deadlines faster. These two factors help to reduce the cost to consumers and lower the financial risk
However, Financial Services companies will need to invest more heavily in the skills that underpin anti-money laundering efforts. People and technology will need to work in harmony.
Technology and the growth of
Regtech, in particular, could offer new solutions against money laundering. However, smart tools and better detection models can’t be run on old computers gathering dust in the corner of the office. New solutions will require two critical resources. Firstly,
they need heavy firepower from IT infrastructure to manage the rich datasets now available from multiple customer interactions. Secondly, they need the correct skills to aim that firepower in the right direction.
The good news is that there’s enough computer power in the world to do anything - even fight fraud - as long as that power is harnessed in the right way. The solution is already within our grasp but requires the right level of thinking at an industry level.
Meanwhile, more work needs to be done on the second issue - that of attracting the right skills to adequately model, maintain and run the systems required.
Consumers taking the brunt of the cost
It is in everyone's best interest to ensure that the costs and onerous activity related to money laundering are not passed on to consumers. A
recent report found that the average household is subject to approximately £250 per annum in added expenses to fund the war on money laundering.
In order to manage, direct and develop the solutions we need, it will require a new generation of highly skilled, tech savvy AML professionals. The allure of Silicon Valley, tech unicorns and a boom in fintech, however, means that the compliance industry
faces stiff competition to recruit the best and the brightest minds. The rise in Regtech is presenting an opportunity to shift the balance in the favour of AML.
With a directed effort from industry and government we could see incubators, hackathons and focused think tanks emerge to quickly shift perceptions, solve issues and attract the right skills needed to support initiatives aimed at curbing money laundering.
A pan-European effort is needed to ensure FIs and regulators are all talking the same language.
Anti-money laundering tech is not sophisticated enough across the board to consistently fight back against determined fraudsters who are also investing in new tactics. Some are winning the battle but for the war to be won, the partnership of intelligent
and high scale IT with skilled people at the helm must form quickly.