Top Five Things Organizations Can Do to Modernize Their Approach to Addressing Financial Crime By Vered Gottesman, ThetaRay CMO
The increasing complexity of the financial regulatory landscape and the growing sophistication and determination of financial criminals have organizations resolved to bolster their compliance and readiness in 2024 with anti-money laundering (AML) capabilities that can give them the upper hand.
Almost every organization, thanks to the interconnectedness of the global supply chain, needs to identify money laundering and terrorist financing activities throughout its operations. The concerns are widespread, with a Kroll survey finding that 69% of global executives and risk professionals expect financial crime risks to increase over the next 12 months; two-thirds of those surveyed plan to invest in technology to counter the uptick in risks.
In addition, as the Economic Crime and Corporate Transparency Act 2023 and new Anti-Money Laundering Authority in the EU are implemented in 2024, financial organizations will be held to a higher standard. Below, we’ll look at the top five things organizations should consider implementing to help them combat financial crimes in 2024:
Adopt AI
At the top of the list is AI, which is rapidly transforming the AML landscape. Powerful algorithms capable of analyzing vast amounts of financial data in real-time and detecting suspicious transactions with lightning speed hold the promise of being able to catch criminals in the act, before they can disappear with their dirty money.
It’s technology that is quickly becoming table stakes, particularly with the rise of innovative RegTech startups harnessing AI and machine learning (ML) to automate and enhance regulatory adherence. Regulators themselves are deploying their own advanced AI tools to identify systemic risks and ensure AML compliance across the industry. In fact the FATF, the global anti-money laundering watchdog, has been encouraging regulators and financial institutions to adopt new and advanced technologies for more efficient and effective use of resources to detect financial crimes. This means to stay ahead of the curve and avoid hefty fines and reputational damage, organizations will also need to invest in modern, AI-powered AML solutions. (The top 100 banks and top 100 payment fintechs around the world have already replaced rules with machine learning technology.)
There’s a misconception, however, that organizations have to hire data scientists to effectively use AI technologies. Further, O’Reilly’s “AI Adoption in the Enterprise” report, found the skills shortage topped the list of challenges in AI and a barrier to its adoption. But the reality is, given the availability of AI-powered solutions that offer data science as a service, it is not a prerequisite to have in-house talent in order to use AI-driven solutions to combat financial crime.
Collaborate
The fight against financial crime requires teamwork. Organizations need to be willing to share information and tactics if they are to get ahead of financial criminals. Increased cooperation between governments, financial institutions, and technology companies will lead to a more unified and effective approach to combating money laundering, which is necessary given the pace and scope of the risks. Some of this collaboration will be done in open-source communities. 
Open-source intelligence (OSINT), which is the practice of gathering and analyzing information from publicly available sources, will continue to play a vital role in helping organizations arm themselves against increasingly sophisticated criminals. In 2024, we expect to see AML teams increasingly using OSINT tools to investigate suspicious individuals and entities to get valuable insights from the broader community that traditional financial data may not reveal.
Consolidate
Data silos are the friend of criminals and the enemy of AML teams. It’s important for organizations to ensure the architecture of their systems doesn’t stand in the way of identifying and addressing financial crime. In 2024, banks and fintechs must find ways to break down silos between various business functions and systems to get a more unified view of what’s happening across the organization. It’s the only way to get the multi-dimensional perspective that’s needed to significantly enhance their financial crime detection and prevention efforts – enabling business growth, which leads us to the next point.
Turn Investment into an Enabler
Investing in compliance and readiness simply as a cost of doing business, misses out on the opportunity to use it to enable growth. Enhancing transaction monitoring and compliance can give organizations an edge. It enables organizations to quickly and effectively understand risks to support better decision-making, helping identify when to seize opportunities that will grow the business safely.
In addition, it can drive automation and more intelligent business practices that improve the organization’s operating expenditures (OpEx), not to mention the value created by maintaining compliance and building a good reputation. When consumers can trust a business, they will transact with that business – 81% of consumers state that trust is an important requirement for buying from a brand.
Test, Test, Test
While technology plays a vital role in combating financial crime, the human element remains extremely consequential. Organizations need to continue to train and develop their internal resources to build their analytical skills, critical thinking, and understanding of existing and emerging money laundering methods to keep them current and compliant. One of the best ways to build this internal muscle is to test the organization’s existing technologies and approaches continuously. This will help team members know what to look for and do, eliminating surprises and helping identify gaps in capabilities or knowledge that need to be filled. The more organizations test, the better they become at discerning between meaningful suspicious activity reports and false positives to ensure they remain compliant and competitive.
Organizations that resolve to be vigilant and bolster their compliance and readiness efforts in 2024 will be in a good position to capitalize on all the new year has to offer.
The regulatory landscape continues to evolve, emphasizing the imperative for financial entities to prioritize compliance with AML regulations. AI-powered AML can ensure that banks and fintechs are able to grow efficiently and effectively while remaining compliant and avoiding significant fines.
Chief Marketing Officer, ThetaRay
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