New insights into the past year’s results continue to emerge as the new year begins. Today’s headline of Financial News reads: “Global anti-money laundering fines surge 50%.” AML regulations are enforced most stringently in the United States with over $37 billion in penalties imposed on organizations that fail to comply with AML, KYC and other related laws and regulations.
However, there is disagreement among industry experts as to the effectiveness of such penalties. Some believe that the penalties, no matter how severe they are, don’t seem to be effective and that the only way to effectively fight money laundering and other types of financial crimes is to enact personal liability and that “the way to punish a banker is to take away his or her money” (Dennis Kelleher, chief executive of Better Markets – US financial reform advocacy group).
On the other hand, Stuart Graham, analyst at Autonomous (UK) believes that although the imposed penalties had been “manageable” for most of the banks, the “tolerance of banks’ AML shortcomings is very low nowadays.” In addition to heavy fines and following remediation efforts, as well as inevitable additional investment in AML/KYC processes, the banks suffer reputational damage and become “uninvestable.” Which means, that even more funds and efforts need to be invested in restoring reputation and “investability.”
To put it simply, it’s more cost-effective for banks (or any other financial or non-financial institution) to do the right thing than to deal with the consequences of cutting corners.
To reduce the workload and comply with strict AML regulations, financial and non-financial institutions need to conduct proper effective KYC and monitoring of all its transactions, screening them against constantly changing sanctions and blacklists. On the other hand, they need to reduce the workload on its compliance workforce to maintain profitability, while most of AML systems deliver over 30% False Alarms, lacking the capability to effectively match names and entries from multiple lists. This results in enormously high number of alerted transactions for manual review.
Based on its patented technology, Fincom’s AML solution is already helping many American financial institutions to comply with the strictest AML regulations effectively and efficiently by CONSIDERABLY reducing the alerts rate (among other advantages) and by screening transactions and monitoring clients onboarding validating their legitimacy against the most updated sanctions lists in Real Time, resolving the problems of transliterated or misspelled names, and more. Fincom’s AML solutions covers all the DFS’ AML and CTF requirements, protecting its clients’ integrity, reputation, and revenues by eliminating the risks of AML-related penalties.