As the complexity in financial crimes rises, regulators all over the world bring down more stringent compliance regulations for the financial services sector and other businesses to follow. Consequently, this increases the demand for anti money laundering software solutions that can help companies, particularly banks and financial institutions to monitor and track suspicious activities and to analyse client data as well. Thanks to the solutions put forward by the RegTech sector, it is now possible to identify and investigate alerts in real time. Such solutions have immensely improved the effectiveness of compliance operations, in addition to maximizing security.
Advanced AML software solutions have proliferated the market for fraud prevention and compliance solutions. They are predominantly using techniques like data warehousing, big data analysis and machine learning to track suspicious activities for banks and enterprises. They are allowing the financial service institutes to enhance their compliance activities thus building trust amongst customers and reducing the risk of financial crimes.
What Drives the Market for AML Solutions
In the past few years the crackdown on financial crimes, particularly money laundering, has increased. Ever since the release of Panama Papers financial regulators have been rallying for stricter laws and regulations to be imposed on businesses and the financial services sector. Financial Action Task Force – the intergovernmental regulator – has also been imposing sanctions and penalties on governments and financial institutes all over the world for not implementing anti money laundering laws. Stringent policies on money laundering have also been gaining ground as an increasing number of such operations have been found linked to terrorist factions and drug trafficking.
Moreover, with the volume of transaction and client data that comes through, it is next to impossible to analyse it manually. Thus financial institutes have realised the importance of automated compliance systems. Investing in effective AML software solutions is the best option for enterprises to keep their practices clean. Higher costs of implementation of AML regulations are also driving the demand for AML solutions.
The Best Digitised AML Solutions
Some of the best software solutions currently available in the AML space include;
- Transaction Monitoring Systems
Modern transaction monitoring systems use advanced tech like machine learning to identify suspicious transactions from the client data. They reduce false alerts and learn from different scenarios to track customer behaviours. Such systems adapt to new rules without the need to update their protocols.
- Identity Authentication Systems
Identity verification or authentication systems are AML software that allows companies to verify their client’s identities through online document verification and address verifications. They scan a customer’s documents (passports, IDs, drivers licences or utility bills) to authenticate their information. Such third-party solutions also provide AML checks by scanning an individual’s name against global AML watchlists and media outlets.
- Currency Transaction Reporting Systems
Financial institutes in the US are obligated to report every transaction over the limit of 10,000 dollars to FinCEN. To do so electronic currency transaction reporting systems are available that automatically generate reports to submit to the institution.