The Challenges in Today’s AML Compliance Practice and How Regulation Technology Can Help

The Challenges in Today’s AML Compliance Practice and How Regulation Technology Can Help

Obliged entities constantly strengthen their compliance mechanisms and spend more on AML compliance compared to the past decade. Compliance is now seen as a vital mechanism in obliged entities not only due to fear of the cost of non-compliance but also due to increased regulation.

More and more companies are looking to bring AML Compliance Officers onboard. You can read more about this topic in our previous article, The ever-growing need for Anti-Money Laundering Talent.

The main challenges faced by today’s Compliance Officers are:

How to Implement Regulation

There is a challenge as to how the number of rules, regulations, guidelines and best practices surrounding regulated entities (such as investment firms, investment funds and investment fund managers) can be implemented.

Covid-19 Consequences and Remote Work

The covid-19 outbreak placed another hurdle in the compliance function of regulated entities. Many firms have been forced to work remotely and as a result, the coordination and compliance functions of regulated entities became harder, and the same for on-site inspections and monitoring of staff. Fortunately, nowadays technology can provide workable solutions. Many regulated entities moved towards long waited upgrades in their systems and automated compliance solutions which added another tool in the compliance officers’ toolkit.

Increased Risk of AML Compliance and Fraud

Technology has also created an opportunity for criminals to exploit it. The pandemic changed the pattern of investors and suddenly, millions of people started using electronic means for transacting or even joining trading platforms for the first time. The disruption caused by covid-19 “blurred the waters” and “blinded” compliance officers, as building the economic profile of clients during unprecedented times proved to be an extremely hard task. This increased the risk of AML compliance, as fraudsters could exploit this confusion to pursue their illegal activities.

Vast Volumes of Data to Be Processed by Compliance Officers

Another key challenge is the vast volumes of raw data flowing which must be processed and analysed by compliance officers. Fraudsters usually make use of complex structures and transaction patterns which creates vast volumes of data that can sometimes be thrown to compliance officers in a disorganised manner. The main challenges faced by regulated entities is the task of harnessing those data and connect the various streams of disorganised information.

It is important to foster a culture of AML Compliance within your organization. You can read our tips on this matter in our previous article.

How Can You Tackle Compliance Challenges?

Within the next five years, cutting-edge AML compliance departments will dramatically change how they investigate suspicious activity, conduct KYC and operate their automatic monitoring programs. The majority of investigations will be automated, KYC will be conducted in a seamless manner and machine learning will more effectively identify suspicious activity.

Our tips to tackle compliance challenges are:

Time-Effectiveness with RegTech

Technological advancements have grown a lot due to the demand of the industry in being more efficient and the need for fast solutions. Regulatory Technology (RegTech) facilitates compliance with regulatory obligation, saves time and is a useful tool in the hands of compliance officers. There is software available on the market that can provide solutions to release compliance officers from the strain of manual searching and organising data. This will be achieved by devoting their time more effectively in analysing the data they receive.

Training for AML Compliance Officers

Regulated entities limit their risk of exposure by investing more in training their employees on AML compliance matters. When preparing their employee training program entities should also consider which employees require training, the content of the training provided, the form of the training, the frequency and how employees can keep up to date with emerging risk factors. Find out more about our in-house AML training courses, tailored to your needs and requirements.

Stronger Compliance Controls with Professional Advice

Internal controls are policies created to mitigate the risks of money laundering. They also support staying compliant with AML regulations. A strong internal policy is the starting point and offers guidance on how to stay compliant with the AML framework. We can assist you with designing and implementing an effective AML program to support your organization’s compliance and regulatory obligations.

How can CX Financia Help You?

If you are looking for a way to strengthen and organise your organisation’s compliance mechanism and provide your employees with the necessary training to help them protect your entity from hefty fines.

Contact our team and find out more about our services.


Get the latest business news, directly to your inbox