Compliance with Anti-Money Laundering (AML) regulations can be a struggle for banks—and it can also mean higher costs. Our experience and industry analysis indicate costs for AML compliance have risen an estimated 50 percent in the past three years. And as regulators continue with refinements, costs should continue to rise.
As highlighted in our video below on AML cost reduction, one of the first steps banks can take includes honing in on where the costs are coming from. Some of the usual culprits include work around enhancing transaction monitoring, updating and maintaining Know Your Customer information, and retaining and building AML staff.
Once they know what is driving costs upward, what can banks do? One step is to expand the frame, and consider the broader issue of fraud and financial crime when assembling an AML compliance strategy, so the effort can be comprehensive and holistic.
Additionally, financial firms can focus on some key actions that can help drive more efficient results. We recommend these three steps:
- Take a global look at AML compliance, keeping enterprise-wide implications in mind.
- Help AML staff and senior management make informed decisions by equipping them with the right data.
- Formalize a talent management strategy that focuses on hiring, retention and building skills.
Of course, there’s more to the story. Our blog on Fraud and Financial Crime hones in on the various ways banks and financial institutions can tackle crime and manage the associated risk. And our paper, Reducing the Cost of Anti-Money Laundering Compliance, delves deeper into the three steps I’ve described above.