The five biggest AML compliance challenges facing financial institutions and how NorthRow can help

AML compliance challenges

Anti-Money Laundering (AML) compliance has become an increasingly complex and crucial aspect for financial service institutions in the modern era. As a result, firms face several challenges in effectively combatting money laundering, terrorist financing, and other financial crimes. 

In this article, we will explore the five biggest AML compliance challenges that financial institutions encounter, the significance of each, and provide an insight into how NorthRow’s AML compliance platform can help.

Resource capacity and capability 

One of the primary challenges faced by financial institutions is ensuring sufficient resource capacity and capability to meet AML compliance requirements. Implementing robust AML processes requires significant investments in technology, personnel, and training. 

Financial institutions must employ skilled professionals with expertise in AML compliance and possess the necessary tools and technology to identify suspicious activities effectively. Limited resources can impede an institution’s ability to monitor AML efforts, conduct customer due diligence, and implement appropriate risk assessment processes. A lack of adequate resources can lead to an increased risk of non-compliance, which may result in severe legal and reputational consequences. 

How can NorthRow help?

NorthRow removes the need for labour intensive human verification of documentation and manually adding new customers to your business. Using our WorkStation platform, firms can streamline the AML checking process by automating repeatable steps, such as routine document verification, and utilising software to analyse ID documents for legitimacy and corroborating documents against one another. 

Ultimately, using NorthRow frees up compliance teams to focus on more complex cases where their expertise is most needed,  reducing the need for increased resources by alleviating much of the heavy lifting associated with KYB/C checks. 

Regulatory and political change 

The regulatory landscape surrounding AML compliance is continually evolving, presenting a significant challenge for financial institutions. Governments and regulatory bodies worldwide are tightening their AML frameworks to combat increasingly sophisticated money laundering schemes and terrorist financing activities. 

Financial institutions must stay updated with the latest regulatory changes, adapt their compliance processes accordingly, and ensure compliance across multiple jurisdictions. Frequent changes in AML regulations can create compliance gaps, confusion, and increased compliance costs, making it challenging for institutions to keep up with the pace of change. 

How can NorthRow help?

The very core of our software means that staying abreast of regulatory and compliance requirements is key. Whether it’s changes in reporting requirements, or new legislation impacting compliance professionals, with NorthRow, you can rest assured that your firm is always compliant with the very latest in regulatory requirements. 

Our WorkStation platform serves as a single source and record of all compliance tasks and activities. As a cloud-based, highly secure solution it’s always up-to-date and your business can easily access records, make decisions and store interactions in order to meet regulatory requirements.

Compliance inefficiencies 

Inefficiencies in AML compliance processes can undermine the effectiveness of financial institutions’ efforts to combat money laundering. Manual processes, outdated technology, and siloed systems can lead to inefficiencies and hinder the identification and reporting of suspicious activities. 

Legacy systems often struggle to integrate data from multiple sources, making it difficult to establish a holistic view of customer transactions and behaviour. This disjointed approach can impede accurate risk assessment, monitoring, and the ability to identify the signs of money laundering. 

How can NorthRow help?

We pride ourselves on being an end-to-end KYC, KYB and AML software provider. Where other software houses provide one or the other, NorthRow delivers the ability to check both individuals and companies, run ID&V checks, remediate client cases and monitor them for any changes in risk profile. 

Where inefficient processes require compliance professionals to access a multitude of platforms, data sources and record-keeping, NorthRow unites the entire AML compliance process in one single, cloud-based system – accessible anywhere, at any time. 

compliance trends report

Data coverage and accuracy 

Another significant challenge faced by financial institutions is ensuring comprehensive data coverage and accuracy. AML compliance requires access to vast amounts of data, both internal and external, to identify potential risks and patterns effectively. Institutions must collect, aggregate, and analyse data from multiple sources, including transactional data, customer information, and third-party data providers. 

Incomplete or inaccurate data can lead to false positives or negatives, impeding the ability to detect suspicious activities. Data quality issues may arise due to inconsistent data formats, outdated databases, or insufficient data sharing mechanisms between institutions. Financial institutions must invest in robust data management systems and processes to ensure accurate and comprehensive data coverage for effective AML compliance. 

How can NorthRow help?

With data sources spanning over 200 jurisdictions, NorthRow is an industry-leading AML compliance software provider. We partner with the very best data providers and collate data from across the globe from industry-leaders such as Bureau van Dijk, LexisNexis and Dun & Bradstreet. 

Our unrivalled network of trusted data providers removes the need for disparate systems by automating your data research and collection for KYC/B in one single, integrated solution.

Ongoing monitoring 

Effective AML compliance requires continuous monitoring of customer transactions, behaviour, and risk profiles. This ongoing monitoring helps institutions identify and respond promptly to suspicious activities, enabling them to meet reporting obligations and mitigate potential risks. 

The challenge lies in establishing scalable and efficient monitoring systems capable of handling large volumes of data in real-time. Automated transaction monitoring systems equipped with advanced analytics can help identify suspicious patterns and behaviours accurately. 

However, financial institutions must balance the need for sophisticated monitoring tools with the risk of false positives, which can strain resources and lead to compliance fatigue. 

How can NorthRow help?

As time goes on, risk profiles can change dramatically from the beginning of a commercial relationship, increasing risk and the threat of financial crime. WorkStation combats this by ensuring ongoing client due diligence requirements are met through real-time monitoring for changes to individuals or organisations (including global sanctions, negative media, new directorships, changes in ultimate beneficial ownership and political exposure).

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