Anti-money laundering (AML) program effectiveness
Transforming AML programs to enhance outcomes for law enforcement and national security
The AML Act of 2020 represents a fundamental reform of the AML regime in the United States, codifying in law a shift in focus from maintaining technical compliance to a more risk-based, innovative, and outcomes-oriented approach to combat financial crime and safeguard national security. While implementing regulations will unfold over the coming years, the enactment of the AML Act presents an opportunity for financial institutions to rethink how they will drive AML program effectiveness in line with new requirements.
AML/CFT Priorities: 5 areas of potential impact and 5 key questions for FIs to consider
As required by the Anti-Money Laundering (AML) Act of 2020, the Financial Crimes Enforcement Network (FinCEN) recently issued the first government-wide National AML/Countering the Financing of Terrorism (CFT) Priorities (Priorities).When implementing rules become effective, Financial Institutions (FIs) will be required to incorporate the Priorities into their risk-based AML programs.The publication of the Priorities is a significant step forward in shifting the primary focus of regulators and FIs concerning AML programs from maintaining technical compliance to a more riskbased, innovative and outcomes-oriented approach to help combat financial crime and safeguard national security.
Conversations about strategic anti-money laundering priorities
1) Aligning to national priorities and enhancing outcomes for law enforcement
Key challenges and questions:
How will you pivot your AML program to focus on national AML and CFT priorities?
How and at what frequency would you adapt your current risk assessment practices and capabilities to address the new priorities?
Do you have the required insight and information about priorities that affect your business?
How would you create more useful information for law enforcement?
How would the effectiveness of your FI’s AML program be evaluated in the future by the board, auditors, and examiners?
What are the possible metrics and examples that could be used to demonstrate effectiveness
How would independent testing of AML programs change, and how would examiners and auditors determine if FIs have done “enough” to demonstrate focus on the priorities and assess the value of the information produced?
What law enforcement feedback could be used to focus and refine your program?
2) Refocusing resources on higher-value AML activities
Key challenges and questions:
Given the expectations outlined in the AML Act, how would you create a repeatable change process to drive ongoing transformation and resource redeployment to high-value activity?
How would you determine which activities are delivering low AML risk management value?
How would you document, justify, and defend AML program risk and procedural changes?
Where should you start? What’s the right strategy? How could you scale the effort and effectively reallocate resources?
3) Rethinking AML monitoring, investigations, and information-sharing
Key challenges and questions:
How can your FI enrich and automate current monitoring, investigating, and reporting approaches to deliver more useful information for law enforcement?
Can routine activities be automated to free up resources and utilize standardized processes?
Are there areas delivering low AML risk management value, which could be scaled back?
What strategies and analytics can be deployed to reduce false positives coming out of your FI’s monitoring system(s)?
How will your FI better utilize and share information and intelligence from a broader array of internal, external, and public sources?
How can you appropriately leverage emerging tech and next-generation (NextGen) AML detection models?
Can a NextGen approach help achieve the goal of identifying more complex suspicious activity?
What are the data, technology, modeling, and regulatory challenges associated with developing, testing, validating, and implementing such models?
Actions to take now
Evaluate how your risk assessment processes could be modified to more deeply address expected priorities, and identify metrics and examples that could be used to demonstrate effectiveness.
Assess areas of low added risk management value, in light of recent regulatory guidance, for potential reductions and/or reallocation of resources.
Consider ways to further enrich, automate, and innovate AML monitoring and investigations and to deliver more valuable information to law enforcement in a more efficient and effective manner.
How Deloitte can help
Deloitte’s Anti-Money Laundering & Sanctions practice helps clients reduce risks related to money laundering and terrorist financing and improve their ability to meet regulatory expectations for sound, effective AML programs and controls. Learn more about our services, as well as our global network of AML specialists, which leverages our global team of former AML compliance, technology, and analytics leaders from the public and private sectors, including former bank regulators, federal law enforcement officials, and AML compliance officers.
