In a recent ACAMS* roundtable session titled Yesterday, Today and Tomorrow: The Path to AML and Fraud Fusion, three experts from Bottomline discussed the rising juxtaposition of compliance and fraud and risk management to show how those often-disconnected work streams and teams are collaborating in new and interesting ways. Historically, compliance teams focused on anti-money laundering prevention while fraud teams monitored for fraud exposure and its mitigation. 

What’s changed and why the push to bring these teams together?

Bottomline financial crime and risk management colleagues James Richardson, Head of Market Development Risk and Fraud, Omri Kletter, Global VP of Cyber Fraud and Risk management and William Brown, Senior Compliance Product Management, sat down to explore the emergence of fraud and anti-money laundering (FRAML) teams and the difference a united front can make in the fight against financial crime.

Kletter began the discussion by explaining how three main forces have converged to create a perfect storm:

  • Operational pressure – brought on by COVID-19 and the forced shift to working remotely while attempting to maintain cost savings and efficiencies
  • New account sanctions – regulatory changes with more stringent and expansive parameters
  • Technology – advancements in tech which provide businesses full visibility by leveraging data, sophisticated analytics and investigation tactics

Brown noted that early in his compliance career AML and fraud sat in different areas within an organization. But when he started to converse with his fraud colleagues, he discovered that there were multiple instances of duplication in both spend and effort. The advent of COVID-19 and the vulnerabilities it exposed have ‘lifted the veil’ for banks and corporates on the importance of adopting technology in the fight against anti-money laundering and financial loss – which can be catastrophic to an organization and its continued operation.

There’s also been a dramatic shift in the way fraudsters conduct their business. Gone are the images of a hacker wearing a hoodie and hunched over a laptop. Cyber criminals increasingly are as sophisticated at the technology advances designed to thwart them. Even as large breaches raise awareness, Richardson explained that criminals are organizing and finding successful ways to act like authorized users and hide in the normal transaction traffic.

Fraudsters are also launching multi-pronged attacks, not just at the point of exit. Kletter clarified, “This means organizations must protect the lifecycle of the transaction, not just the portal or the weakest link. That means monitoring every payment before it leaves the building and a tighter implementation of controls even before user activity is a factor.”

And there are also great consequences from the AML side as well. Organizations face reputational risk, loss of funds, heavy fines and even imprisonment as a result of money laundering activity – even if it stems from outside attacks and influences. Ignorance is no longer an accepted excuse. As Brown explained, “It’s important to keep in mind that criminals have multiple lines in the water – corporates, charities, and banks – because even if only 20% of attacks are successful, that yield is enough to write off the other 80% of effort…the biggest mistake with AML is complacency.”

Organizations can obtain a holistic overview of a customer’s risk profile by integrating fraud and AML teams to create a robust case management task force. Providing a platform suited for cross-organization use, regular knowledge sharing, and open communication are all integral to collaborative fraud prevention. This more centralized strategy, along with putting data to use with analytical tools, can provide real-time transparency. Taking this multi-layered approach is critical for strategic decision making and winning the fight against financial crime.

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*Association of Certified Anti-Money Laundering Specialist

Posted by Germaine Lang

Germaine Lang is the Managing Editor of SmartPayments with a strong creative and technical writing background across many industries. She also works to engage customers and relate their experiences with vendor products and services, positioning them as innovative thought leaders.