AML Failures Up Enforcement Ante

Addressing the Problem: Investigator Productivity

Occasioned by the announcement of a consent order with Florida bank Gibraltar Private Bank and Trust, the Office of the Comptroller of the Currency (or, OCC) announced two significant updates to its policies and procedures for calculating civil money penalties for non-compliance or persistent, uncorrected BSA/AML compliance.  The OCC took the opportunity to call-out failures in the Gibraltar response  to earlier orders - setting clearly tougher expectations for under-performing or unresponsive compliance programs.  

Gibraltar’s cited failure to mitigate previous AML investigation failures was a key element in the $6.5 million fine for the $1.6 Billion bank.  The OCC singled out inadequate investigator training, inability to review all alerted transactions, and failure to review cases in a timely fashion in its consent order.  In short, the OCC called out Gibraltar’s inability to improve the productivity of its AML investigators as the reason for its penalty.

But Gibraltar isn’t the only financial institution struggling to stay in compliance as its business growth outstrips its ability to hire, train, and equip investigators.  The most recent WSJ/ACAMS survey of AML compliance executives singled out competent staffing as the second leading challenge they face.  Despite prolonged and significant investment in monitoring and case management systems, backlogs continue to grow and exposure to regulatory sanction increases.

What Is To Be Done?

Like most effective efforts to change a problem, the first step is to recognize and acknowledge the root cause. In this case, there’s a clear candidate for our focus – the tasks we’re asking AML investigators to perform.  If we ask them to consult dozens of screens (usually separate applications), collecting evidence with bearing on the case they’re investigating – then compose a summary and a narrative organizing the evidence – then review, weigh, and decide whether to close or escalate – isn’t it possible we’ve overlooked a good place to focus technology?

First, let’s measure the problem – establishing a baseline for the next step.  Simply measure (using what we know about statistics and sampling) how long it takes  - from time of receipt to time of disposition – to close the initial investigation/review of a suspect transaction.  For argument, let’s say it takes two hours to gather, organize, document, and review a reasonably broad range of ‘facts’ about the transactions in question.

Wait.  Why do it that way?  Why ask human analysts to do something machines and software can do with perfect accuracy and unimaginable speed, viz. collect a couple of hundred facts from twenty-five separate applications or databases and organize them in a pre-formatted document that provides summary and narrative the analyst can quickly digest.   For the purposes of calling attention to what we’re considering, imagine that an analyst opens a new case and receives the summary and narrative instantly (computers can do a lot while we’re getting coffee)- and performs a thirty (30) minute review of the evidence before closing the case.

What’s happened?  Productivity has increased three-fold (four cases close in the time it took to close one).  The analyst has spent MORE time analyzing evidence and is likely to make a more accurate assessment (increasing accuracy and improving the certainty of the investigation).  You’ve increased your monthly processing capacity dramatically without increasing operating expense.  And you’ve got the ability to eliminate backlogs, quickly and economically.

It Happens

Sound like a dream – too good to be true?  Well, it’s real and it isn’t.  Attivio has just launched a focused solution for accelerating AML investigation – precisely by delivering effective data unification and integration directly where it can help your investigators – gathering, analyzing, and communicating evidence at enterprise-, global-scale.  We’ve outlined the proposition in a new eBook.  More importantly, the solution is compatible with any existing combination of transaction monitoring, case management and KYC solutions you deploy.

Money-laundering is the last step in any number of things we’d all agree are pretty terrible – funding terrorism, international narcotics, human trafficking.  This solution is a new step in making it harder for the bad guys to get paid without being detected.  And it’s worth millions.