While systems cost is often perceived to be the big budget item in AML compliance programs â programs that cost billions annually for the U.S. financial sector alone â it is actually the costs of investigations and Suspicious Activity Report (SAR) filings rather than the hardware itself that eats up the vast majority of compliance budgets.
âMost software applications used to detect money laundering are extremely inefficient, delivering only one case-worthy alert per every 100 generated,â explains Dr. Michael Recce, Chief Scientist at Fortent and author of the paper, Taking Costs Out of Compliance: Smart Ways to Boost Your Operationâs ROI. âThis level of operational inefficiency wastes a huge amount of time and money in AML compliance operations. It also increases regulatory risk.â
Ray Parodi, Fortentâs Group Executive, Product Management, adds, âLooking across the full range of AML compliance activities for our clients, we have developed solutions that address the key cost factors that impact ROI. The most significant driver by far is how much organizations spend on operating their AML systems and all the workflow that surrounds these systems, including investigations.
âWe have put our R&D into finding ways to reduce these costs, and have found that using the right technology can lower the total cost of ownership of AML systems by up to 40%,â says Mr. Parodi.
The white paper outlines three discreet steps to lowering ownership costs of AML systems:
1. Break down enterprise data silos â Often the product of acquisition or organic growth, data silos create problems for identifying AML patterns over different lines of business.
2. Adopt dynamic profiling technology in addition to rules â Older rules-based technology often generates false positives that waste professionalsâ time.
3. Leverage AML systems to fight fraud â Banks can use pattern recognition technology to detect other financial crimes, including fraud and employee theft.
âAs organizations seek to maximize their returns on investment, there is technology available that can make this happen by creating large operational cost savings,â says Dr. Recce.
âCEOs, expense chiefs, operations officers, and compliance directors can derive immediate value and ROI while at the same time achieving more rigorous compliance standards for regulators.â