The need for real-time fraud monitoring of banking transactions across the enterprise is well

established and many banks are catching up to move from traditional methods to advanced real-time fraud
monitoring systems. But many banks are still living with the old generation anti-money laundering
systems which only can perform offline transaction monitoring by taking the transaction data from core systems
offline or in batch mode. Also, there is a lacuna with these systems from the perspective of agility and flexibility
for changes required, with the changing times and the regulatory mandates.

Need for real-time transaction monitoring in AML capabilities

With the advancements in operational systems and technology for faster, rather, real-time payments &
remittances and the rise of multi-channel banking, the money launderers of this age need less than an hour or
few hours at the maximum to complete the three key steps of money laundering process: Placement placing the
illegal money into the system; Layering - separating the illegal money from the source through a series of
transactions and making it difficult to trace the origin; and Integration- converting the illegal money to legitimate
form. This accentuates the need for real-time monitoring capabilities for detection of suspicious transactions and
effectively combating money launderers. Majority of the banks across the globe are not well-equipped with realtime suspicious transaction monitoring in their AML systems and this is one area banks need to gear up.

Here are the key aspects of alignment of anti-fraud and anti-money laundering efforts in a bank

Operational Processes and people: Both anti-fraud and anti-money laundering departments of the bank need
dedicated investigated teams who investigate each case/alert that systems generate based on the severity level
and category of the alert as per the defined processes of the bank. The nature the business has become such
that these investigation teams need to operate on a continuous basis and even 24/7 depending on how the fraud
processes are configured. Both these teams need similar investigation tools for completing the investigation
workflows and finding the evidences in order to resolve cases. It makes sense for the banks to optimize the
efforts of investigation teams by having combined AML and fraud investigation under single umbrella.

IT Platform: Real-time transaction monitoring, integrated case management and comprehensive investigation
workbench are the common basic build blocks of both fraud management and anti-money laundering systems. If
the both fraud management and AML can be done using a single platform bank will have huge benefits in terms
of the capital and operational expenditure leading to significant benefits total cost of ownership (TCO).

Data: Data Integration is one challenging area for banks. Both fraud management and AML systems need the
integration with the same host systems (core banking system, credit cards etc. ) for the corresponding
transactional data and master data. If there is a single platform, that can handle real-time integration with host
systems for getting the events from the host systems and use the same both fraud management and AML
purposes, this could be hugely beneficial for the bank.

With the need for sophisticated fraud detection capabilities and current state of out-dated AML system many
banks have, combined Real-time Enterprise Fraud Management and AML platform is an idea whose time has
come. Few banks have already begun their journey on this front and we expect more banks to join the
bandwagon.
How do you envision your anti-fraud and anti-money efforts at your bank? Do let us know your views- wed love
to know.