As the world continues to shift toward digitization, the effectiveness of a program is no longer simply ideal, but a standard. This is especially important when it comes to fintech applications that are meant to detect and prevent crime, especially for anti-money laundering (AML) protection. Since the success of financial services relies on customer trust and satisfaction, it is a requirement that any bank or agency use some form of regulatory technology to prevent fraudulent activity and protect data.
Some institutions hire their own in-house team to create their software while others outsource and contract the services of companies that specialize in the technology. If you are in the process of selecting or developing an AML reporting software for your company, here are a few processes that you cannot go without:
Integration of Application Programming Interface (API)
Many top companies and agencies are leaders in the financial sector because their AML software remains updated and compliant. This consistency is because of API integration, which automates all scanning processes without human intervention. Having people screen thousands of transactions every day is not only labor-intensive, but it is also costly and can still lead to errors. Automating this process eliminates this problem by expediting the process with fewer mistakes.
The only workforce that may be needed is a team of programming experts who can maintain operations and tune up the system, as necessary. Otherwise, the control processes can be left to operate in the background while the bank’s employees focus on other tasks.
Advanced Search Algorithms
To aid with screening, the software has to be calibrated with advanced search algorithms. Doing so will ensure that any suspicious activity is properly flagged, eliminating any false positives and negatives. This is where a knowledgeable person needs to be involved in improving the software to continually tweak and enhance the match rate determination of the algorithm. It is important to pay close attention to the algorithm so any issues can be corrected sooner rather than later.
While the program may be automated, it still needs to be programmed according to the needs of your company. Otherwise, trivial and mundane bits of information (such as customer info and business names) may be wrongly flagged by the system.
Thorough and Legal Framework
It should go without saying that all your software processes should be legal and do not violate any rules. Given the nature of the finance niche, all AML reporting software must be compliant with industry standards and government regulations. It may be essential for banks and other financial institutions to seek counsel from compliance experts to ensure that whatever software they invest in or develop is effective, updated, and completely legal. This may require experts to be an active part of creating the framework and screening the entire program every step of the way.
Indeed, every country has its own set of laws when it comes to detecting and preventing criminal activity, especially those that involve money. As such, getting insights from compliance experts from time to time helps ensure that an AML reporting system is thoroughly compliant to avoid any fines as a result of breaking the law.
Exhaustive Screening Programs
While the risk of people making accounts for nefarious reasons will never completely go away, the software system can do something to mitigate it. The best way to do so is to develop a scrupulous screening process so that these accounts can be found and reported before the owners can commit a crime. This can come in the form of an extensive identity verification check from the moment someone opens an account with your bank.
Many cybercriminals rely on faulty and shallow security checks to carry out their crimes. A system that deters such individuals from the very beginning ensures better protection for customers and data. In addition to customer portals, you might also want your software to screen for other suspicious activity like sudden increases in transaction frequency, any spikes in amounts transferred, and transfers related to entities with money-laundering history. If your screening program is especially sensitive to these red flags, you can prevent any fraudulent activity from ever occurring.
AML Compliance Monitoring
In the ever-changing world of technology and industry compliance, your software needs to be continually regulated and improved. For employees in charge of said software, they must follow industry practices to ensure any system updates are timely and legal. Even the most advanced automated software will still need human evaluation and judgment for special cases. That being said, having a platform in your system for testing, improving, and investigating errors will make the monitoring process more thorough and effective. That way, you won’t have to spend as much time manually investigating suspicious activity.
A good AML reporting software always includes the functions mentioned above. Including these processes does more than just increase productivity and efficiency. Doing so also ensures that your software is compliant with rules and regulations. As such, your company and your customers can rest assured that it is working as it should be in crime prevention.