Choosing the Right Anti-Money Laundering Software: 3 Things to Think About

Fraud and Financial Crime

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Joe Susienka

Jan 24, 2018

Choosing the right anti-money laundering software is a key consideration for financial institutions. While most industry focus has historically centered on the alarming rise of cyber security issues, fines for anti-money laundering (AML) violations have been quietly continuing to add up. According to Reuters, since 2009 there have been more than $342 billion in fines from U.S. and European regulators for misconduct, of which money laundering is a part. There’s no better time than now for organizations to evaluate their various security protections, particularly as they relate to AML systems. Between rising costs, new legislation and new technologies, the likelihood is high that not only is your system not where it needs to be -- but that its actually doing you more harm than good. Updating your system might seem like a daunting task. The reality is, however, checking into what’s available for upgrades and even considering what emerging providers have to offer for AML technology is a far easier short-term investment than dealing with the long-term ramifications of regulatory fines and ever growing maintenance costs. So what things should you consider as you evaluate your own systems?


The maintenance and labor costs associated with maintaining and staffing legacy AML systems is growing at an incredible rate. Accenture estimates that AML costs for financial institutions have gone up 50% over the last 3 years with another 20% increase expected next year. According to a survey conducted by Lexis Nexis, in Europe alone more than $83.5B a year is spent on AML compliance – roughly the equivalent of the entire Dominican Republic’s GDP! AML systems have typically consisted of costly licenses and require an inordinate amount of services and implementation effort to setup and configure. These large upfront costs understandably create a barrier to upgrade or evaluate other solutions. But maybe it’s time to change all that. Cloud-based offerings reduce the infrastructure requirement and allow for frequent upgrades to continually improve the system over time. The rise of subscription-based software models can also reduce more of the up-front costs required and allow organizations to see an immediate financial benefit when moving to new solutions. Concerned about the costs of upgrading? The costs of modernizing are still dwarfed by the labor costs to investigate and research alerts generated by legacy systems -- the main cost for AML systems year over year. According to Lexis Nexus, labor makes up 70% of the annual cost of an AML solution. To compound the issue, more than 60% of institutions believe they will see a rise in the number of alerts they will need to investigate next year, which will increase the amount of labor needed to support these systems exponentially. With salaries for AML professionals climbing at an average growth rate around 5% per year according to Robert Half, finding ways to make AML staff more productive can significantly lower overall costs and provide the justification for looking at new solutions.

New technology

New technologies inherent in modern AML solutions (think machine learning) can improve detection, lower false positive rates, and simplify investigations reducing labor costs. These types of innovations have been embraced by established AML providers and offer an impressive array of benefits. One example impacts the tremendous focus around Know Your Customer regulations and how machine learning can more accurately profile customers by taking different factors into account when creating risk scores. The technology can also automatically update the customer risk profile as changes in behavior and other factors are identified, which allows for accurate classification of customers. This technological assistance makes it possible for investigative teams to easily prioritize and research the highest-risk cases. Because new technologies such as machine learning create a more dynamic model, with risk factors being more easily updated, it then becomes possible to identify trends in the overall customer base, such as a country going from ‘medium’ to ‘high’ risk.

Regulatory changes

New legislation that forces the addition of new rules and the updating of existing ones creates even more strain on legacy AML systems and staff. Many institutions find themselves trying to meet these demands by bolting additional functionality on to their older AML systems. These ad hoc solutions can be costly to implement and often require even more manpower and labor costs. New regulations like the roll-out of ‘The 4th Directive’ in the EU and ‘The Final Rule’ in the U.S. have served as great opportunities to evaluate AML systems and see where efficiencies can be created by upgrading or looking at new solutions. But the key is to start as soon as possible. An upgrade or replacement project is a serious undertaking that shouldn’t be done quickly simply to meet a new regulatory requirement. Institutions should start their search for a solution that can create efficiencies in the AML process well before a new requirement comes up, allowing for plenty of time to select, implement, and test it. Rising costs and new legislation create the necessity for institutions to step back and evaluate their AML programs overall. Now is the time to reduce maintenance costs, improve productivity, and help stay compliant with new and changing AML legislation.

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Joe Susienka

Joe Susienka, an experienced B2B payments and compliance specialist, helps deliver secure payment solutions that meet the compliance needs of organizations. He is a Product Manager for Bottomline Technologies and is both CAMS and PMC-IV certified.
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