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3 ways to realize ROI on your AML enforcement action response

FINANCIAL INSTITUTIONS INSIGHTS  | 

Congratulations. You've successfully navigated your AML enforcement action by following the steps outlined in our article on dealing with an AML enforcement action. It took considerable time, effort and expense, but now you're done. What you do next can be the difference between realizing real ROI on that investment or turning it into a sunk cost. Taking the right steps now to leverage your AML response effectively can strengthen your controls, improve your operations and better position your financial institution for the future.

First, make sure your AML effort is aligned with your business strategy.

You've just invested considerable effort pulling together a tremendous amount of information on your institution's AML strengths and weaknesses. That makes this the perfect time to take a fresh look at the intersection of your business model and operations and your AML concerns. Some key questions to consider include:

  • Are your AML capabilities, your product mix and your customer relationships appropriately aligned? Every product and every relationship carries some degree of risk, but your recent enforcement action may have exposed areas where those risks are higher than you anticipated or where your ability to control them is weak. Continuing with the status quo simply invites another AML failure and another enforcement action down the road. Carefully consider the value of risky products and relationships to make an informed decision whether the best move is to derisk your portfolio by eliminating certain products and terminating certain relationships or whether the return from them justifies the investment necessary to ramp up your AML capabilities to support them effectively.
  • Are your personnel up to the AML challenge?  In responding to your enforcement action, you may well have uncovered errors by your personnel. How can you best strengthen your team to avoid issues in the future?
  • Do you have the right tools and are you using them appropriately? Automated AML systems can play a key role in improving both the effectiveness and efficiency of your AML effort. Too often, though, these systems are not properly adapted to an institution's unique environment, causing either wasted time because too many items are flagged for review or missing key issues because the system's parameters have not been tuned to recognize the institution's risks.

Second, strengthen your team.

The right personnel with the right training are vital to your AML effort. What weaknesses did your enforcement effort reveal and what do you have to do to address them? Answer these questions:

  • Do you have the right people? Does the core team responsible for your AML effort have the right mix of skills, experience and credentials? Remember, AML is a rapidly and continually evolving issue. If your team hasn't kept pace with the changes, the right team from five years ago may not be the right team now.
  • Do you have enough people? AML demands have increased significantly in recent years. Many institutions investigating compliance failures find that suspicious transactions that should have been reviewed more carefully slip through because over-taxed personnel simply did not have time to address them. 
  • Do your people get the right training? Training is vital not only to your core AML team but across your organization. Yes, your core team must be trained to effectively leverage your systems and to be kept abreast of emerging risks due to shifting products, markets and relationships, but the actions of people throughout your organization affect your AML effort. Are tellers trained on appropriate AML issues involving cash, deposit patterns and other issues? Are the people in your wire room up to speed on Office of Foreign Assets Control risks? Do your lenders have the controls in place to confidently track where the money you are lending comes from?

Third, test and tune your tools.

The right systems can go a long way to an effective AML response. But they must be tailored to your organization's product mix, relationships, geographies and operations. Our recent article, Tailoring your AML tools and processes for efficiency and success, shows how effective system validation, system logic and system optimization can vastly improve AML system effectiveness. But there are other concerns to consider, too.

  • Are your people properly trained on your systems? Automated AML systems are powerful, sophisticated tools. As we work with institutions on their AML efforts, we often find that their people are unable to take full advantage of their system's capabilities because they have not been fully trained to exploit them.
  • Is your AML system effectively integrated with your other systems? Your AML system is only as effective as the data feeding into it.
  • Is your board reporting sufficient? Make sure you include timely and transparent reports to your board on AML efforts.

Don't waste the time and effort needed to respond to an AML enforcement action. Take this opportunity to ensure your AML effort is aligned with your strategy; you have a strong, trained team, and your tools are ready to support your operations. That's how you realize real ROI on your AML enforcement response.