It may seem like anti-money laundering regulations are on the rise, but the truth is they have been a source of constant pressure since the September 11th terrorist attacks. Regulations have tightened, increasing the burden on financial services institutions. Richard Stocks, Pitney Bowes solution director for financial crimes and compliance says that regulations have “ballooned, and continue to increase. Once upon a time, banks worked with a certain set of known rules and regulations. Things moved more slowly. You had time to learn how to accommodate the next regulatory change, the next risk. No more.”
Because of this, financial services firms must utilize the most innovative and secure solutions possible to manage risk. With tighter regulations, operations costs for financial services have skyrocketed in order to accurately comply with new legislation. In 2016, an estimated $55B in banking expenses were related to regulatory requirements. Large banks can spend well over $1B each year on compliance. Applications of artificial intelligence (AI) and analytics for compliance and risk modeling are becoming increasingly common choices for financial services companies as more fintech vendors begin to emerge in the industry.
Protecting personal information in the digital world is a key issue for fintech, and a number of recent high-profile security breaches highlight the importance of adopting robust data security measures. The growing use of cloud computing and cloud storage options may add a further layer of complexity. A business that contracts with service providers that have access to customer personal information will want to protect itself through its contractual arrangements.
More often than not, AML investigations can lead to lengthy, clumsy, unproductive investigations with efforts wrongly focused on high-risk, high volume merchants. The truth is, money laundering is happening in multiple smaller-scale, seemingly low-risk players. A new approach and new tools are needed for online anti-money laundering efforts. AML should be a shared responsibility among law enforcement, e-commerce companies, international standards-setting organizations, managed service providers, fintech companies and individual users.
