Commenting on FinCEN’s ANPRM (part 3): The single-step AML process

This content series examines different angles of the FinCEN anti-money laundering ANPRM released in September 2020. If you didn’t get a chance to read the first and second parts, we suggest starting there.

The FinCEN anti-money laundering ANPRM notice can be divided into three sections. The first section discusses identifying and mitigating risks related to money laundering. The second concerns the need for closely monitored compliance, and the third part focuses on reporting information to authorities. These are all incredibly critical procedures, and we are thrilled to see FinCEN diving deeper into each one and suggesting ways to improve it, mostly using technology. At the same time, in this article, we wish to offer a different outlook that can tie them all together to deliver better results.

The traditional AML approach

While the three-step process makes sense, it also demonstrates a somewhat outdated state of mind. Separating the process into distinguishable steps that can each exist independently is an outlook that follows the logic of workflows that rely on legacy systems and manual labor.

There are different players in the Anti Money-Laundering (AML) community, and we believe that their approach to technology will determine how they perceive the new ANPRM. Organizations that divide tasks and responsibilities between different departments will find it easier to identify with the ANPRM’s point of view. More technologically advanced businesses and authorities will struggle to separate the AML effort into different sections. Their routine workflow doesn’t consider these steps independent and views them all as part of a single, connected process, which we’ll now discuss.

One goal, one process

The new era of tech-based AML includes far more than new tools. It brings a new perspective on the overall process of analyzing risk, mitigating it, and learning from it. Upon embracing this new state of mind, we no longer separate the process into different steps and instead build a new, streamlined flow that simultaneously tackles all challenges and promotes every goal. We can no longer tell the difference between risk analysis, compliance monitoring, and reporting because all three happen at the same time and rely on one another.

The streamlined AML flow is critical for several reasons:

1. AI relies on the big picture

Smart, tech-based AML is focused on AI technology. AI algorithms feed off of information and improve as they gather and analyze data over time. Separating the process into different steps that each takes place in its own environment may block certain information. This will deprive the algorithm of critical data and negatively influence the algorithm’s efficiency and the end result.

2. Explainable AI also relies on the big picture

Explainable AI provides accurate information based on the analysis and monitoring of risk across the organization. If we want explainable AI technology to be able to live up to its promise and offer a thorough and detailed explanation, we have to expose it to the entire process. Separating the AML procedure into steps instead of streamlining it decreases our ability to do so.

3. Keeping communication channels open

One of the Compliance teams’ main goals is delivering updated, real-time information to all relevant parties. When there are delays and information reaches one department after the other, this goal is damaged. A single-step process keeps everyone informed at once. This allows teams to comment on each other’s work and offer their expertise where and when it matters.

4. Compliance is ongoing

We want AML monitoring and analysis to be a routine, ongoing process that’s part of everything the organization does. By combining all three steps instead of dedicating specific times for each procedure, we stand a far better chance of achieving this. A well-oiled AML machine does all three at once and well.

5. Shifting the narrative

We discussed the need to change the conversation around money laundering and make it less complicated and intimidating. Simplifying the process is an excellent way of doing so. The single-step process is easier to understand, implement, and embrace.

The new AML reality is different in many ways, but also better in every aspect. A swift, smart process yields better results with less effort. It enables better communication, improved AI efficiency, decreased intimidation, and more. The global AML community still has to make a few adjustments to get on the same page, but with the support of influential organizations like FinCEN, we’re well on our way.