6 Crucial Stages of AML Case Management

Money laundering remains a concern for financial systems. With anti-money laundering (AML) fines still rising, it's become increasingly important to implement effective methods to combat this, such as AML case management.

Implementing AML initiatives like transaction monitoring and case management can help mitigate and prevent illicit financial activities from impacting businesses and, on a bigger scale, global financial systems.

Discover how an effective AML case management system can help you take charge and protect your business from financial crimes.

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What is AML case management?

AML case management is a systematic approach used by financial institutions and other regulated industries to detect, investigate, and prevent money laundering activities.

This can serve as a framework that secures the vital processes for AML compliance, from identifying high-risk customers to investigating suspicious activity and reporting. When a strong AML case management system guides businesses, they can boost the operational efficiency of compliance teams while protecting their customers.

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6 Crucial stages of AML case management

Compliance with legal and regulatory AML procedures is necessary to avoid AML fines and protect consumers and the financial system from illicit activities. This means the structured sequence of steps indicated by the AML case management process should be followed as it can identify, investigate, and report suspicious activities potentially linked to money laundering.

Let's look at the most important steps a business needs in its AML case management system.

1. Transaction monitoring

Transaction monitoring is one key stage in managing AML cases. The Financial Action Task Force (FATF) requires financial institutions to report suspicious activities, making it imperative that businesses determine which cases need further investigation. Transaction monitoring effectively supports compliance in this regard.

By continuously monitoring customers, institutions can determine and flag any unusual behaviors in the system. This sets the stage for mitigating and preventing further development of financial crimes.

The most efficient AML case management systems use transaction monitoring solutions to automate the assessment and management of risk exposure. These systems can often alert management of suspicious transactions based on predefined rules and scenarios.

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2. Alert triage

Having an alert triage in place serves as an extra layer of assurance to verify the validity of an alert. Compliance teams must analyze the case once the transaction monitoring system sends an alert. This means cross-checking false positives to ensure efficient resource allocation.

Cases can be prioritized based on their complexity and risk level. AML case management processes should have a risk-scoring model standardizing how customers and transactions are evaluated.

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3. Case investigation

When an alert is escalated, the investigation is launched, and data collection influences the final decision. The compliance team can research and gather additional data from the business's database, interview the parties involved, and collaborate with other departments to confirm information accuracy.

Aside from the flagged transaction, some other databases that must be considered for additional information include:

• KYC and KYB data with the corresponding customer information risk profiles
• Information from payment systems data that share domestic and cross-border transaction details
• Lists for sanctions, politically exposed persons (PEP), and adverse media
• Credit reporting agency databases that provide a thorough background on financial history

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4. Decision making

Every relevant piece of information can be used as evidence in the AML case under review. Investigators can then collaborate strategically with other teams to determine whether the activity is suspicious.

The compliance team must finally reach the best resolution and action plan for the case. The action plan can vary based on the verdict. The usual considerations for the next steps are:

• Filing Suspicious Activity Reports (SAR) if cases are deemed suspicious
• Tightening ongoing monitoring procedures for the customer
• Closing the case if there is no substantial evidence that points to financial crime
• Other regulatory or legal actions

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5. Case documentation

Documenting the full investigation from initial detection to the final decision and actions taken is a non-negotiable regulatory requirement. They should be able to detail all vital information surfaced from findings, even any further recommendations for future reference. These documents are reported and filed away for future reference in audits.

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6. Internal and external reporting

There are two streams of reports that are necessary for reports. This includes SAR filing and internal reports. For a quick look at their differences:

• SAR filing
  If suspicious activity is confirmed, SARs should be sent directly to the relevant regulatory authorities within 30 calendar days or immediately if an imminent threat is tied to the case. This timing starts when suspicious activity is flagged, and the institution has collected enough information to confirm the case.
• Internal reporting
  While timelines may vary when reporting findings to the internal team, stakeholders, such as senior management and the board of directors, should be notified immediately. Most institutions follow the 24-hour standard after detecting suspicious activity.

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How to improve your AML case management process

Improving the AML case management process involves a combination of technological upgrades, process optimization, staff training, and continuous monitoring.

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Enhance data quality and integration

Access to a diverse range of reliable and up-to-date databases can expand the kind of evidence you have on hand to make informed decisions. Regular data cleansing to maintain the accuracy and relevance of the information you work with can make all the difference throughout the research stage.

Financial institutions can also effectively source all this data by using a unified platform that integrates all the databases. It should be able to provide a comprehensive view of customer activities along with information pulled from different streams, such as internal systems, to external sources, such as public and private records.

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Leverage advanced technology

Institutions can greatly benefit from integrating advanced technology into their compliance program. Different types of technology are available today, but it's important to consider what can streamline the most time-consuming tasks. Some considerations for technology to leverage are:

• Automation
  Automation systems for processes like transaction monitoring automation tools can reduce many manual tasks, specifically reviews, and keep the process going 24/7. This can minimize the chance of human error and improve suspicious activity detection rates.
• Machine learning and AI
  It's important to consider that as advanced technology today can be used for good, it can just as well be used for financial crimes. Machine learning algorithms and artificial intelligence are ideal for identifying even the more complex patterns and anomalies done with new tech that could potentially be missed by traditional rule-based systems most institutions currently have in place.

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Refine alert generation and management

Review and adjust any existing thresholds and rules for generating alerts regularly. This can minimize false positives and negatives, saving the business time and the use of existing resources.

Refining the alert triage process and the feedback loop can also fast-track response times and investigation. This could mean developing categories for different types of alerts or enriching alerts with customer data profiles that analysts can see immediately.

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Strengthen investigation processes

Compliance teams can thrive with standardized procedures in place. In this way, team members will know the necessary protocols when suspicious activity occurs. By providing continuous training and professional development for investigators, you can rest assured they can conduct the right anti-money laundering procedures at any point.

It's also important to build an environment that fosters collaboration between the compliance, legal, risk management, and other relevant departments in the institution to enhance the investigation process.

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Improve documentation and reporting

Comprehensive documentation on all stages of the investigative processes makes for an impressive report. The best way to improve this is with automation tools that can generate reports that adhere to all regulatory requirements.

Exhausting effort in this contributes to a clear audit trail for all AML activities. They can prove useful for internal and external audits.

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Choosing an AML case management system

Implementing a good case management solution is crucial for effectively managing and mitigating risks associated with money laundering, terrorist financing, and other financial crimes. It can also ensure compliance with regulatory laws.

Here are some features you'll want your AML case management solution to have:

• Transaction monitoring
  A transaction monitoring feature that automatically tracks and screens large volumes of transactions can make it easier and more efficient to detect suspicious activities in real-time. It would be even better if it could utilize risk-matrix analytics and scoring to enhance the process.
• Integration capabilities
  Older institutions may not have a method for centralizing data. The right tool should allow you to source data from multiple sources and seamlessly integrate it into any existing IT infrastructure, including core banking systems, CRM, and other relevant software.
• Customizable systems
  Systems that enable customization for workflows, rules, and reports help make the transition process smooth. This cuts down time in the adjustment period for steep learning curves and fast-tracks processes right off the bat.
• Scalability
  A truly scalable solution should be able to provide the room to support a growing business. For instance, handling large data sets and constantly updating the system with new technology that can evolve and keep in time with changes to compliance regulations and detect new criminal attempts.
• Cloud vs. On-premise
  Decide whether a cloud-based solution or an on-premises deployment is more suitable for your organization’s infrastructure and security requirements. A cloud-based solution can be hosted online on the provider's servers, while on-premise solutions require installation. There are solutions that offer both.
• Data security
  When handling sensitive data, it is crucial to ensure the system you use adheres to the highest data security and privacy standards. This means robust encryption and access controls are necessary features.
• Regulatory requirements
  There are systems that can run the necessary checks that notify you of regulatory requirements based on your jurisdiction. Choose one that lets you know when you need to update your compliance program to avoid unwanted fines and penalties.

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How Vespia can level up your AML case management system

When you invest in advanced AML case management software, you must choose one that offers the full package of automated workflows, alert prioritization, and real-time analytics.

Vespia, for instance, has a robust AML compliance solution that keeps your processes efficient, accurate, and scalable as your business grows. With a platform that can access over 4,000 databases in over 190 countries, you can automatically screen and monitor customers 24/7.

With your preferred risk matrix and rules in place, you can escalate urgent cases as they happen. Plus, you get detailed machine-readable PDF reports for a complete audit trail to ensure you cover all your bases for compliance. Vespia allows financial institutions to detect and manage AML cases from start to finish effortlessly.

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Streamlining AML case management

Having a robust AML case management system is not just about fulfilling regulatory requirements. It's a vital strategy for protecting your business and the global financial system from financial crime.

While there are ways to enhance your overall procedures for AML cases, investing in an AML compliance solution can ensure accurate and efficient investigations.

With solutions like Vespia, financial institutions can elevate AML case management processes, helping keep the business compliant and prepared to face the challenges of an increasingly complex regulatory environment. Schedule a demo today to learn how your business can seamlessly integrate the solution into your compliance program.