Regulatory control has been increasingly tightening. Shortly after the adoption of the 5th AML Directive, the European Parliament published further rules to strengthen the fight against money laundering through the 6th EU AML Directive.
Growing PEP lists and a ‘one-size-fits-all’ approach result in high volumes of irrelevant alerts that take up valuable time and resources to process.
95-99% of alerts generated by ineffective solutions may well be false positives.
Analysts who work on ‘low value’ alerts add to FTE expenses. If budgets are curtailed for the wrong reason, the consequences are likely to be swift penalties or serious reputational damage.
Perpetrators are constantly on the lookout for new ways to launder their illicit funds. It is next to impossible to spot new patterns of behavior with rigid and solely rule-based systems.
Rapid changes in fintech and e-commerce make monitoring and flagging suspicious transactions and customers even more difficult. Compliance teams are expected to use advanced technology, such as artificial intelligence and ‘big data’ to combat money laundering.
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