Pandemic disruption in 2020 prioritized the automation of anti-money laundering (AML) investigations for compliance teams. Risk related to inconsistent investigation decision-making and reporting multiplied. The danger of penalties heightened. And now, the 2021 National Defense Authorization Act (NDAA) makes technological innovation a necessity.

AML teams have spent much of 2020 scrambling to adapt with 2021 set to be the year of transition. Chief compliance officers and their teams are taking stock of what happened so they can identify – and capitalize on – the trends shaping the future of AML operations.

Key AML Trends in 2020

Almost overnight, the COVID-19 crisis transformed AML operations. The financial industry faced many unforeseen challenges and learned painful lessons. Many forward-looking financial institutions coped, while legacy-oriented laggards fell even further behind.

Alert backlogs multiplied in 2020. The inefficient and less productive conditions of remote working were a root cause. Even now, this remains a challenge for many as all financial institutions attempt to hold the line on costs. Managing business growth by adding hard-to-find internal investigators became even tougher than before.

Legacy-based transaction monitoring systems (TMS) are also a culprit. The realities of our “new normal” were never factored into their design. Their misinterpretation of 2020’s surge in digital transaction activity added to already-steep alert backlogs.

“We’ve seen a 50% increase in the number of alerts we have to investigate,” noted one compliance officer at a New York bank. “Predictably, most were false positives, but we weren’t prepared to handle the volume.”

Fully understanding the unparalleled challenges of 2020, regulators granted leniency. FinCEN anticipated delays in the filing of Bank Secrecy Act (BSA) reports. They advised financial institutions to keep them and their functional regulator apprised, but with the expectation that they will get back on track as soon as possible.

QuantaVerse, too, was well aware of these challenges. New adaptations of the QuantaVerse Automated Investigations solution launched in May 2020, and financial institutions have utilized it to eliminate backlogs by automating their investigation process and ensuring business continuity.

2021 AML Legislative Trends

On December 11, 2020, the United States Congress passed landmark BSA/AML reforms. The 2021 National Defense Authorization Act (NDAA) achieved strong bipartisan consensus.

The bill’s key highlights:

  • Financial institutions must provide streamlined, real-time reporting of Suspicious Activity Reports (SARs).
  • The BSA Advisory Group will establish a Subcommittee on Innovation and Technology. Their brief: to encourage and support technological innovation for AML and Combating the Financing of Terrorism (CFT).
  • FinCEN and federal functional regulators will appoint “innovation officers.” Their mission: to ensure financial institutions remain responsive to innovation and technological developments.

Over the past few years, these requirements were foreshadowed by statements encouraging innovation, but now the writing is on the wall. With major reforms are now in play, AML teams need to accelerate change in the use of technology, digitization, and new forms of working.

Current and Future AML Trends

COVID-19 pushed financial institutions over the technology tipping point. Business has transformed, and there is no going back. Forward-looking compliance teams are accelerating automation in AML investigations. Machine learning, a powerful subset of AI, provides the answer.

The benefits of automating the investigation process with machine learning are clear. The QuantaVerse Automated Investigations solution automates and replicates much of the human investigative process for AML teams. For example, QuantaVerse can currently handle up to 70% of AML investigation work — reducing the investigation process timeline, enabling efficient management of case queues, and quickly eliminating backlogs. AML teams also receive from QuantaVerse distinct types of Financial Crime Investigation Reports (FCIRs). The result: reduced risk, lower costs, and improved efficiencies.

Right now, AML teams using QuantaVerse solutions have:

  • Reduced 20-minute alert triage to 5 minutes
  • Turned a three-hour investigation into a one-hour investigation
  • Shortened a high-risk entity review from five or more hours down to one

Cloud deployment is also driving change. It accelerates adoption time and facilitates remote work and collaboration among investigation teams. It also optimizes capital and contractual commitments. This can be a boon for banks currently operating with reduced security staff and a tighter budget. Leveraging the cloud, QuantaVerse solutions complement existing TMS and case management tools, and can be quickly deployed out of the box with implementation and results realized in weeks – not years.

Don’t get left behind

Companies invested in digital technologies proved far more competent during the crisis. Many innovative financial institutions are now better positioned than they were before. Technology-related capabilities are an indicator of future compliance and success. And, the pace of change is only set to increase.

Innovation is on every responsible AML team’s digital roadmap right now. Machine learning and cloud capabilities are helping them streamline investigative processes. They’re improving consistencies and lowering their risk of penalty.

It’s time to accelerate your plans. Automate your AML investigation process before the next big disruptor arrives.

To learn more about automating your AML investigations, please visit: QuantaVerse.net/our-solutions.