The new tool reduces high acceptance and rejection error rates associated with manual AML customer risk assessment processes.

Ondato Risk Scoring delivers an advisory risk assessment that gives financial institutions a significantly better understanding of their AML risk exposure across their customer portfolio. It shows each customer's risk score, enabling companies to make informed decisions about how to manage that risk and what additional actions to take to minimise the risk. The solution is fully integrated in the Ondato OS platform, which covers the entire customer onboarding cycle, creating risk-based management of new and existing customers.

When onboarding new customers, banks and nonbank financial institutions currently face a significant challenge knowing when to accept applications and when to reject them. Accepting customers who later turn out to be fraudulent or infringe AML regulations — false positives — risks compliance failure and reputational damage. Eliminating false positives with stringent monitoring of customer accounts runs the opposite risk of false negatives and can lead to unnecessary account closures and a backlog of appeals.

Institutions are struggling to achieve a satisfactory balance in AML risk management processes. One major cause of these difficulties is that current AML decision-making is often inaccurate and even irrelevant. It tends to rely heavily on human input and defensive box-ticking approaches to risk, and is frequently not integrated into wider business processes.

As a result, customer complaints about inaccurate and heavy-handed onboarding are widespread. In 2020, Resolver, a UK-based online complaints resolution service, said it had received more than 8,100 customer complaints over the previous three years against the four main digital banks: Monzo, Revolut, Starling and Pockit.

Liudas Kanapienis, CEO and co-founder of Ondato, says: “Part of the challenge preventing better AML compliance is that the majority of current risk assessment and risk management tools are still based on spreadsheets, such as Excel, or static reporting platforms. As a result, they do not allow data to be analysed in one place and at a scale large enough to cope with the demands of growing companies or established institutions. Ondato Risk Scoring eliminates the need for spreadsheets, automates the risk assessment process, and generates a more fine-grained picture of risks.”

Before Ondato OS, institutions tended to have separate tools for each client onboarding step, making it complicated to manage and integrate a holistic KYC cycle and risk assessment. The platform provides enhanced process automation for greater efficiency and lower operating costs, minimising the risk of interventions and fines from regulatory authorities.