The Intelligent Way to Consolidate Anti-Money Laundering and Anti-Fraud Resources

At a recent Anti-Money Laundering (AML) conference, many BSA Officers voiced a common frustration that they were wasting time on false positives every day at the expense of detecting actual money laundering cases. This frustration is the result of a prevailing misconception that has been promoted by some software companies who claim that money laundering and fraud are often crimes committed by the same offender and should be detected together by using their software packages. After purchasing such software packages, some financial institutions try to detect both money laundering cases and fraud cases together. This has resulted in a huge amount of time, money and resources being wasted.

This misconception can be corrected through a proper understanding of the sophisticated facets of transactional risks and by using a solution that truly helps financial institutions consolidate their resources to easily, effectively and efficiently manage these risks. Transactional risks are defined as risks directly associated with the transactions. For example, money laundering risk and fraud risk are directly associated with the transactions. Nevertheless, these risks possess very different characteristics. Customers who conduct money laundering through financial institutions intend to use the financial institutions as vehicles to achieve their goals. These money launderers usually pretend to be “good customers” since they need the financial institutions’ assistance to accomplish their schemes. They do not mind paying extra fees or losing interest on their money, and thus from the financial institutions’ perspective, these money launderers may appear to be great customers. This is a key reason why financial institutions need to conduct data mining on all transactions in order to detect money laundering activities which are hidden behind the scene.

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