Anti-money laundering (AML) is a mature industry with many aspects and choices about how best to satisfy regulatory requirements– from pre-onboarding through effective monitoring to reporting and off-boarding in order to help financial institutions stop financial crime.
AML is fairly procedural with a high degree of information gathering, processing, and analysis. Too often, AML’s pain-points are considered “business as usual.” It’s still labor intensive, whether this means an army of people trawling through alert output or a larger-than-expected number of specialists training artificial intelligence/machine learning models. AML is global, and, depending on size of the institution, is managed regionally and is dealt with locally.
Historically, AML monitoring yields alerts with no context, with hundreds of thousands of them each month to manage. This is in contrast to traditional trade surveillance which has the luxury of context through market news, sentiments, transparent market data, etc., that allows for cause and effect. Traditional alert-focused monitoring solutions struggle to provide much-needed context because they rely on static, parameterized alert behaviors. This challenge is compounded in firms with multiple business lines– such as banks with institutional or retail brokerage, wholesale banking, correspondent banking, and now crypto intermediation– all with different trade and transaction flows.
If you take a step back and think about how you manage risk in everyday situations, you’ll say to yourself, “Tell me when…” and start creating combinations of events that– depending on what it is, where it is and how severe it is–will determine what you do. Unfortunately, in the AML universe that is typically achieved through alert management, meaning all alerts require investigation and new cases to merge alerts. A significant amount of time is spent on alert triage or, dare we say, alert parameterization to manage a high volume of alerts.
A New Path
For the past 20 years there has been a standard list of alerts that everyone runs. Imagine, instead, if you could be more specific from the beginning– not just applying various risk scores to the transaction or applying different transaction counts and limits to different products. Imagine being able to define multiple signals which are tailored to your business flow and client types and being able to combine these signals to achieve higher quality and business-relevant alerts.
A signals-based approach to AML combines multiple events into a “scenario model,” reducing false-positives and producing effective, targeted results compliance officers can manage easily in their workflow. Each signal can cut across multiple scenarios and interact with other variables so AML analysts can build alerts specific to their needs and jurisdiction. This approach also allows for a customer activity profile based on past client behaviors and transactions and then generates signals when new customer activity statistically deviates from patterns.
Validus Anti-Money Laundering Solution
This reimagined approach is the foundation of Validus AML by Eventus. Validus AML is a product created from a research setting and honed from analyzing real-world government and commercial datasets. It is powered with the same engineering and customer engagement found in Validus Trade Surveillance.
The stakes are high for getting AML and surveillance right, and compliance teams are being asked to do more. Breaking dependency from legacy providers and adopting the latest approaches is how to prepare your team for the future of financial crime.
About Eventus
Eventus is a leading global provider of multi-asset class trade surveillance and market risk solutions. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets. Validus is proven in the most complex, high-volume and real-time environments of tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. The company’s rapidly growing client base relies on Validus and Eventus’ responsive support and product development teams to overcome its most pressing regulatory challenges. For more, visit www.eventus.com.