Sibos 2020: Industry has widespread “dissatisfaction” with transaction monitoring
There is a “sense of dissatisfaction” in the industry when it comes to anti-money laundering (AML) and transaction monitoring.
So says Matthew Redhead, an associate fellow at international security think tank, the Royal United Services Institute (RUSI).
Speaking on a panel at the virtual Sibos 2020 conference this week, Redhead says people often talk about the costs involved as a factor.
“Most large institutions are monitoring using manual processes and technology, and that technology comes with a lot of additional aspects. Both technical support and in some cases vendor support.”
Redhead says regulators are failing to gain feedback from those they regulate on the efficiency of compliance.
“There’s a huge amount of waste coming from transaction processing systems,” he says. “There is a very low conversion rate from alerts that come out of the platform.”
Despite this Redhead believes that a lot of institutions are doing “excellent” work on using technology to improve their processes.
Artificial intelligence and machine learning are being used to ensure the most urgent and applicable suspicious reports are filed.
Changes are happening at an incremental rate, he stresses, and we cannot expect things to be transformational just yet.
Geraldine Lawlor, global head of financial crime at KPMG, says that criminals are making it harder and harder to detect them with traditional tools.
“Traditional systems have monopolised the market in terms of being the best available at a certain time,” she adds.
A use of data and new technology has advanced thinking around monitoring, says Lawlor. There are marked differences within organisations in terms of where their reporting models are at and how they are maturing.
Lawlor highlights collaborative initiatives in AML formed in countries like the Netherlands as a forward-thinking solution.
At the same time it remains important that people at these firms look at what’s happening within their own individual institutions and “how they manage their personal risk and accountabilities”.
Similarly, Lawlor says that advancement by the banks must be reciprocated on the regulatory and enforcement side.
“It’s all very well to enhance what the banks are doing collectively but if you don’t have the enhancement on the other side the system is not going to work as effectively as intended.”