As financial institutions work to fight financial crime and bank fraud while meeting regulatory concerns, many functions come under greater scrutiny, including Anti-Money Laundering (AML) programs. As institutions look to transform their AML capabilities and corresponding AML functions, they are faced with many challenges.  How do they create a sustainable organization that can balance the ability to respond to regulators while supporting business as usual?  Where do they find and retain the skills necessary to support both of these requirements?

While trying to address these challenges, it is critical banks remove themselves from the daily grind and look more broadly to find solutions.  These solutions can often be found using a pragmatic approach, following simple steps based on key principles.  Here are three principles, for consideration:

  • The standardization of functions on a global level and across business lines is what regulators are expecting
  • The centralization of  functions is a key stepping stone in sharing skills across the organization
  • An ultimate goal for building efficiency into these functions is to tap into centers of excellence or managed services

Good news: By taking these steps, AML functions can position themselves for better efficiency and to implement more cost effective solutions. The key is to avoid migrating the entire AML function/organization in one wave. By looking across or within functions at the process level, opportunities for standardization will exist. These individual opportunities can serve as a foundation from which to build.

For some banks and financial institutions, the approach has been to look within a specific line of business and take a more business-driven approach. For others, especially those with a less complex business model, a more holistic approach was implemented, one that centralized a broader set of activities.

The principle is to start somewhere and create a methodology that works and can be leveraged, regardless of the line of business or functional domain. Ideally, the methodology is built while thinking outside of the box, and is not constrained by existing organizational definitions or segregation.

As an example, activities such as compliance case management or metrics reporting around risk, which may fall across multiple elements of the AML function today, are often a prime target for standardization and/or centralization. All it takes is deciding to make the change—and having the governance and methodology in place to do it right.

In my next post we’ll talk about the compliance and risk officers behind the AML organization, and see how compliance functions across regions find themselves in the midst of rapid change. For more information about risk management, particularly around responding to the regulatory scrutiny around BSA and AML, see our paper, Building a Sustainable Bank Secrecy Act and Anti-Money Laundering Program—or visit us at the ACAMS 14th Annual AML and Financial Conference.

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