Senior Director - BFS Risk & Compliance
The global landscape of financial crime is a significant concern, with estimates from the United Nations Office on Drugs and Crime (UNODC) suggesting that money laundering reaches between 2 and 5% of the global GDP, equating to $2 trillion to $5 trillion. However, the annual seizure of illicit funds remains below 1% of this total, ranging from $20 billion to $50 billion. It’s no wonder that financial institutions face compliance costs of approximately $274 billion globally, an increase of approximately 28% on the 2020 figure of approximately $214 billion, per a 2022 study by Lexis Nexis.
Effective financial crime monitoring is essential to ensure the integrity and stability of the banking and financial industry, mitigating losses attributed to money laundering, fraud, terrorist financing, and embezzlement. Adhering to regulations like Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) is pivotal in maintaining trust, avoiding penalties, and safeguarding banks, customers, and the larger financial system.
Traditional methods of monitoring financial crime in banks and financial services firms face several challenges that can limit their effectiveness.
Addressing these challenges requires leveraging digital technologies, advanced analytics, automation, low code platforms, and cloud and microservices architecture to enhance the effectiveness and efficiency of financial crime monitoring in banks and financial services firms.
Digital technologies are pivotal in elevating financial crime monitoring in banks and financial services firms by offering innovative solutions that enhance detection capabilities, improve efficiency, and enable real-time monitoring.
AI and ML have revolutionized the detection and prevention of money laundering activities. They allow financial institutions to analyze extensive data volumes, identify intricate patterns, and detect suspicious transactions more accurately and efficiently. These technologies enable the following:
Automation and RPA optimize financial crime monitoring in banks and financial services firms by automating manual tasks, enhancing efficiency, reducing errors, and improving the overall effectiveness of financial crime monitoring.
Optimizing financial crime monitoring using low-code platforms can bring several benefits, including faster development, increased agility, and improved collaboration between business and IT teams. Low-code platforms enable the following:
Implementing cloud and microservices architecture offers scalability, flexibility, cost-efficiency, and improved performance for financial crime monitoring.
Digital technologies are crucial in optimizing financial crime monitoring, enhancing detection, improving operational efficiency, and enabling proactive risk management. By harnessing AI, ML, automation, low-code platforms, and cloud/microservices architecture, organizations can better protect themselves, their customers, and the overall financial ecosystem from the threats posed by financial crimes.
Financial institutions worldwide grapple with the pervasive issue of financial crime, where trillions of dollars are laundered annually. Traditional methods of monitoring, burdened by technology limitations, operational inefficiencies, regulatory complexities, and evolving criminal tactics, struggle to keep pace. Embracing digital solutions is the way forward.
AI and ML empower real-time analysis of vast data volumes, identifying money laundering patterns and behavioral anomalies. Automation and RPA streamline processes, enabling faster responses to potential crimes. Low code platforms expedite development and collaboration, while cloud and microservices ensure scalability, cost-efficiency, and security.
Rakesh brings over two decades of experience in business and IT consulting across banking and capital markets. His focus area is financial crime monitoring and regulatory compliance. At Virtusa, Rakesh handles digital technology-enabled financial risk and compliance offerings.
Subscribe to keep up-to-date with recent industry developments including industry insights and innovative solution capabilities
Businesses are under constant pressure to maximize efficiency while optimizing costs. Find out how intelligent process automation integrated with process mining enables organizations to maximize benefits.
Learn how Virtusa is accelerating banking innovation driven by cutting edge digital engineering capabilities