AML or Anti-Money Laundering Software is a fraud detection software that is used by financial institutions to monitor, investigate and report transactions of a suspicious activities to financial investigation units. The software can enhance the effectiveness of most commonly used rule based approaches which mostly provide false positive rates, and are unable to consider complex interdependencies between various activities carried out to launder money.
AML software enables a business to identify and report suspicious financial activity that could be an attempt at money laundering. As the software follows a set of predefined rules to perform transaction monitoring, any business that processes financial transactions between two parties needs an AML solution to avoid certain activities related to money laundering such as terrorist financing, drug dealing, and human trafficking. The Bank Secrecy Act or BSA and the Financial Action Task Force or FATF have some regulations, guidance, and best practices for a risk based approach that requires to have AML transaction monitoring systems for all financial institutions to combat money laundering and make the financial system safer.
Features of AML Software:
Some of the common features of an AML software include:
- Usually, machine learning is used by the AML software to detect the patterns in suspicious activity and fine tune their rules over time which reduces the number of false positives. Therefore, it is helpful in saving cost as well as time burden on compliance departments.
- It also use new online data sources to help identify criminal activity.
- The financial institutions can file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN). The information to be filled in SAR filings should be in a very specific format including a narrative section, where a description of the case can be written by the compliance officer using strict guidelines.
- AML software can generate a first draft of the narrative which will greatly reduce the time taken to report suspicious activity.
- Anti-money laundering software used in banks have RPA to improve the speed and quality of KYC checks.
- Anti-Money Laundering can detect the abnormality and predict specific events which are commonly missed by humans.
- It categorizes and scores all the suspicious transactions based on their probability of being a real money laundering attempt.
- The Insight module of the software can provide anti-money laundering data analysts and operations, detected abnormalities and suspicious cases arranged by categories, risk or compliance managers with a visualization of statistics in a clear and understandable way.
- Information can be accessed instantly by the user for prevention measures. Relevant money laundering suspicious customers and transaction data can be automatically monitored by the monitoring system.
- You will be able to review and enhance existing AML solutions, as well as can suggest and implement new solutions, based on the requirement of every customer.
Benefits of AML Software:
AML Software has several benefits including:
- Operating costs going down because of greater efficiency of AML software.
- Risk based approach helps to measures to prevent money laundering.
- Less false alarms because of more insights.
- Quick and easy integration with banking systems.
- Up-to-date customer information and robust data analysis
- Streamlines compliance operations
- Improves Risk Protection
- Reduces manpower costs because of user friendly system
- Improved efficiency and faster processing of incidents
- Helps meet regulatory requirements