Cloud-Based Anti-Money Laundering Solutions: Realize Value Beyond Scalability and Flexibility

Sweta Chauhan, Principal Product Marketer, Oracle Financial Services

Globally, over 750 regulatory bodies and governing businesses oversee the financial sector. For banks and other financial institutions (FIs), there’s no escaping their microscopic scrutiny.

Regulatory compliance is no small feat for any FI, but it’s especially difficult for relatively small ones, with their smaller staffs and budgets and fewer technology resources. One particular concern is staying ahead of money launderers, given the potential punitive and reputation damages.

An integrated suite of cloud-based anti-money laundering (AML) solutions caters to the entire AML value chain, including Know Your Customer (KYC), customer screening, transaction monitoring, and regulatory reporting. These suites augment and simplify compliance programs while lowering the cost of errors and inefficiencies found in most AML programs. Here are some of the benefits.

Scalability, flexibility, and security

Scalability and flexibility have long been game changers for cloud applications. This holds for AML Cloud applications too — often targeted towards small- to mid-sized banks that grapple with compliance risks like the larger banks but are constrained with compliance program budgets. AML Cloud solutions delivered as software-as-a-service (SaaS) offer benefits such as scalability, deployment flexibility, implementation configurability, business process optimization, improved efficiency, cost-effective pay-per-use models, and a lower TCO (the total cost of ownership). At the same time, the SaaS model helps banks cope with the exponential volumes of transactions, allows for leaner on-site IT teams, and makes it easier to access new capabilities quarterly and make cost-effective choices to adopt the latest innovations and functionality updates.

As banks lean toward AML cloud solutions, robust security mechanisms are needed to safeguard against the vulnerabilities to data breaches, data losses, and potential cyberattacks or unauthorized access. Safeguard measures, such as firewalls, encryption, security patches, and multi-factor authentication, ensure banks and their compliance teams are shielded from external or internal attacks. AML cloud solutions offer secure SaaS model delivery, ensuring rapid deployment, integration, and configurability with existing core banking applications, improved operational efficiencies, and regulatory compliance while optimizing overhead costs.

Opportunity to strengthen existing AML compliance

AML cloud solutions offer small- and mid-size banks and FIs, a range of advanced capabilities to strengthen their compliance programs. These cloud solutions help automate the manual processes and remedial tasks that allow FIs to channel their compliance resources (team and time) to higher-value analysis, improve accuracy and timeliness of investigations, augment data-driven decision-making and enrich their reporting functions. By strengthening the end-to-end AML value chain, cloud solutions help banks and FIs become nimble, adapt to the complexities of evolving regulatory mandates, and be agile against any vulnerabilities of illicit financial activity. While cloud solutions handle most AML compliance tasks, now teams can focus on other high-value compliance-related matters.

Comprehensive AML scenario coverage

AML cloud solutions can offer extensive AML coverage across the customer lifecycle, from KYC/ Customer Due Diligence, screening, and transaction monitoring to reporting and SAR filing. They offer multiple out-of-the-box scenarios and sets of rules to be used by AML teams. SaaS models help in effortless fine-tuning or adjustment of these scenarios depending upon business requirements. Today’s AML cloud solutions come equipped with targeted models, rules, profiles, workflows, detection capabilities, and AI/ ML and graph-powered advanced analytics. They aid in accurate and timely investigations with capabilities that can help in accurate alert prioritization, remediation, and management. With comprehensive coverage and extensive capabilities, these cloud solutions offer the same AML defense as any other enterprise solution.

Configurable workflows for due diligence and transaction monitoring

Due diligence, continuous monitoring, and real-time transaction monitoring are among the most challenging and onerous tasks for AML teams. A major benefit of cloud solutions for AML is automating the processes and configuring workflows according to specific business requirements. AML teams gain time back to better prioritize tasks for due diligence, transaction monitoring, alert management, and investigations.

360-degree view of the entity and risks

For effective and efficient investigations, banks need an AML solution that offers holistic and integrated case management capabilities. AML cloud solutions offer integrated case management, helping banks streamline customer data throughout the value chain and the entire lifecycle. With a 360-degree view of entities and risks, AML Cloud solutions can improve visibility on alerts and case data, help with alert prioritization and disposition, and provide timely and accurate investigation.

Diligent reporting for rock solid compliance

Between the conundrum of false positives and false negatives, regulatory reporting and SARs filing often turn out to be the Achilles heel for banks and FIs. An AML cloud solution that can generate customized regulatory reports helps institutions safeguard themselves from potential violations or non-compliance. Cloud solutions powered by advanced analytics to detect and identify anomalies in SWIFT traffic, risk indicators, or client/payer/payee data can be extremely helpful in checking any financial crime threats.

Lower compliance costs and lower TCO

The most significant advantage of an AML cloud solutions is that the same AML technology, innovation, and expertise available to smaller FIs is at a much lower cost than their larger counterparts. The SaaS model delivery allows for rapid deployment, configurability, and scalable implementation that it no longer costs a fortune to own an effective AML Compliance program. AML Cloud solutions significantly decrease IT infrastructure costs, in-house development or upgrade-related costs, and maintenance costs, lowering the total cost of ownership.

Bringing it all together

Compliance-related challenges and regulatory scrutiny are the same for banks and financial institutions, irrespective of their size. Yet it becomes more demanding for smaller institutions, given they have limited access to technology, resources, and budgets to meet their compliance needs. AML Cloud solutions come to the rescue as they allow access to the best of AML capabilities without the burden of costs. The benefits to the convergence of AML and cloud extend beyond scalability, flexibility, and usability to an array of others, including comprehensive coverage, holistic case management, lower false positives, alert management, effective compliance and more, at much lower costs.