Reading AML consulting and software company websites clarifies one thing: everybody is selling some EFFICIENCY! It’s everywhere. Apparently, there is a lot of inefficiency in AML.
Some consultants and software sellers know precisely how much inefficiency they can eradicate: “28% less of this,” “47% less of that,” and “71% fewer of these.”
I get it. AML investigations are inefficient, and software will improve this eventually. But before AML is “reimagined,” “disrupted,” and “transformed,” there is a non-technical, low-cost, high-return approach all financial institutions can take that will cut costs and improve quality. It requires three things:
- The right work
- Done the right way
- The first time
The right work: Think about the last 5 to 10 years of audits and exams and how many “suggested” work steps auditors and examiners offered. To avoid potential confrontation, how many of these suggestions, none required by law or regulation, did AML executives agree to? (Many having to do with over-documenting files). How much additional time is expended on every alert and case with no measurable benefit? Go back, look at every added work step, and determine which exist only to appease. Strip these out. Have a bias towards deleting. Perhaps run some “A, B” testing where one group of investigators follows the existing, bloated procedures, and a second group follows the new, leaner procedures. Assess the outcome. Were the same conclusions reached? Were readers able to understand the activity that was investigated and the reasons why it was suspicious or not? Document these findings to show auditors and examiners.
Done the right way: Skilled, properly trained investigators following well-written, easy to understand procedures and applying reasoned and supported decision-making. Quality people, trained well, paid fairly, who feel value in their work. This is not always easy. Much of the work in AML can be monotonous and boring, and procedures requiring what feels like endless copying and pasting of easily retrievable data just for the sake of copying and pasting crushes the soul and drives good people away from this work.
The first time: Quality people, well trained, paid fairly, who feel value in their work, do it right the first time. If QC routinely rejects work, often because of the auditor and examiner’s “suggestions,” how much inefficiency does this add? Track what are the exact reasons work is rejected and returned by QC. Is it for reasons of substance, such as poor decision-making or lack of rationale, or is it because the investigator didn’t execute procedures that do not support the core mission of identifying and reporting suspicious activity?
Yes, auditors and examiners will resist. You must make a strong case for why many (or most) of the work steps added over the years do not improve detecting, investigating, and reporting suspicious activity.
This may not be reimaging, disrupting, or revolutionizing AML compliance, but it makes it more efficient and, more importantly, higher quality and more effective.