Businesses Must Keep Pace with Technological Advancements to Ensure Efficient Compliance
In today’s rapidly evolving financial sector, it is crucial for businesses to stay ahead of the curve by implementing technology-driven compliance measures to prevent money laundering and terrorist financing.
The Importance of Technology-Driven Compliance
According to experts, companies must prioritize marrying technology with protocols to enhance the efficiency of their anti-money laundering (AML) capabilities and detect unusual behavior. Financial institutions are no strangers to using technology-based compliance, but other reporting entities need to catch up.
Benefits of Implementing Innovative IT Systems
Implementing innovative IT systems is essential for detecting, assessing, managing, and preventing money laundering and terrorist financing risks. Such systems can:
- Aggregate data from public sources, news, data providers, and litigation portals
- Provide reliable quantitative metrics to assess risk across related factors
- Reduce false positives and human error
- Ensure more consistent information for filing Suspicious Activity Reports (SARs)
Evaluating Risk Profile and Costs
Smaller businesses or those with lower money laundering and terrorist financing risks may consider implementing technology-based systems only after evaluating their risk profile, available data, and costs.
Identifying Transactional Patterns and Suspicious Activities
Implementing the correct technology can enable firms to identify transactional patterns, suspicious activities, and unusual behavior, making it easier to uncover potential money laundering and terrorist financing risks and report them accordingly.
Regulatory Support for Technology-Driven Compliance
The Financial Conduct Authority (FCA) in the UK promotes the use of technology to support AML/CTF compliance, especially with respect to customer due diligence and ongoing monitoring of business relationships. In Romania, experts warn that if insufficient progress is made in tackling financial crime, the risks posed by money laundering and terrorist financing will increase over time.
The Importance of a Robust AML Programme
A robust and tailored AML programme is essential, but even a strong programme can have holes that criminals can exploit. Companies should harness a strong compliance culture by involving experienced people in AML programmes and utilising appropriate IT systems.
Conclusion
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In conclusion, businesses must prioritize implementing technology-driven compliance measures to stay ahead of the curve and prevent money laundering and terrorist financing risks. By marrying technology with protocols, companies can enhance efficiency, reduce false positives, and ensure more consistent information for filing SARs.
Contact:
- Irina Petrila, Senior Director at FTI’s financial services practice in London
- Federica Taccogna, Senior Member at FTI’s financial services practice in London
- Alexandru Ambrozie, Lead of White-Collar Compliance and Defence Group at Popovici Nițu Stoica & Asociații
Source: Financier Worldwide