AML Transaction Monitoring Solutions, 2023: Market and Vendor Landscape
Historically, providers of anti-money laundering (AML) transaction monitoring systems have considered themselves to be ‘agnostic’ when it comes to the underlying risk strategies of their financial institution clients. The technology vendors that address AML functions have not considered risk strategy to be a core concern. Instead, they’ve seen their role as providing a way for banks to achieve a risk-based approach to money laundering and the detection of other financial crimes.
In recent years, banks have recognized that financial crime risk can manifest in ways other than compliance and regulatory risk. Banks are increasingly treating anti-financial crime strategies as crucial initiatives within their operational risk programs, to tackle a number of challenges, including counterparty risk, reputational risk and emerging investment risk associated with the ethical impacts of financial crime.
In this context, financial institutions should be proactive in preparing for the convergence of risk assessment/intelligence and core transaction monitoring systems. They should evaluate their current AML transaction monitoring solutions and consider investing in new technologies that can help them identify and mitigate risk more effectively. Regulators should also take a more proactive approach to AML enforcement by increasing penalties for AML violations and enforcing compliance in niche areas such as trade-based AML (TBAML). Indeed, by working together, financial institutions, vendors and regulators can create a more effective AML system.
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