Examining The Issues With Today’s AML & KYC Strategies
Add a footer 2 • Do you think checking your customers verbally is enough? • Do you think that everything comes crystal clear in front of you? Or does the customer tell you everything the truth? I don't think it is anywhere difficult to make a person go mad with words and fake documents, especially to financial institutions, but this can be undone when technology comes into play.
Add a footer 3 • With the increasing money laundering cases, the financial institutions need to have a full-fledged program monitoring the customer's data and the function smartly reducing the chances of any kind of fraud & for that AML and KYC solutions have been adopted. These have come up as the biggest opportunities for combating money laundering cases with smart technologies that can regulate the work environment, provide early detection of changes, manage the criminal activities by keeping an eye on the process, meet all the requirements, etc.
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• The biggest problem an institution face is finding the right person/employees for their organization that can meet the technology demands. Technology has already reduced human efforts and an error made by everything turning automatic, but now the problem is to hire the staff. In fact, according to the study conducted by PWCGlobal, “Nineteen percent of those surveyed claim that their ability to hire experienced staff is the biggest challenge to AML compliance.”
• Also not every technology used these days can combat the crimes, some specific is needed in which AML and KYC are leading. Financial institutions face countless challenges with data quality. It takes nerves to bring a complete technological change in the organization and without an adaptive staff; it becomes very difficult because no organization can see the eye-watering wastage of money and inefficient processes.
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• Another major challenge is the money and time wastage on the false positive. It happens quite often when the names of legitimate customers match those on a list of fraudsters. This false positive put a burden on the firm's investigation as to how to correct the screening they have performed. Only an automated process can reduce this burden. These have been some of the common issues for the compliance team competing with the tech.
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One of the greatest challenges of detecting criminal activity is the fact that some money laundering activities go undetected. One study suggests that “only 50% of money laundering or terrorist financing incidents were detected by system alerts.” The alerts received earlier could save the loss and if in case missed then the institution has to face significant financial loss. These can further lead to many severe consequences putting a question mark on the company executive’s liability.
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