Does identifying and detecting suspicious activity reduce the risk of money launder, or is it the first sign of real danger?
This is just the beginning. If you have not adopted an advanced and reliable AML case management system, it could worsen your organization’s reputation and financial structure.
This involves further investigation of previously detected suspicious activity either at identification or while screening and monitoring customer information.
The predefined rules set in the AML detection software generate alerts when any transaction meets such criteria, and reviewing such suspicious transactions to determine whether they are related to criminal activities is another False positive result.
Case management is very important, so in this blog, we will explain the principles and methods for a proper case management system.
AML case management Workflow
AML case management is a systematic and structured process based on a predefined set of rules regulated by the compliance team. Here is the general workflow that every business and organization can follow to handle the case professionally.
- Identification of Suspicious Transaction
It all starts when something suspicious is monitored within the organization based on predefined rules and scenarios. When a transaction or set of transactions meets the predefined criteria for suspicion of an organization, it will generate an alert. The flagged transaction could be due to many reasons, including transaction size or activities involving high-risk money laundering.
- Case Prioritization
The real management system starts here when the compliance analysts review the transactions re-flagged as suspicious to determine whether they are criminal activities, another false positive, or if further investigation is warranted.
At this stage, the compliance officer prioritizes the case by checking the level of risk the particular case poses. They will ensure that high-risk cases are investigated immediately and with more care.
- Investigation
Now, one of the compliance team members will gather detailed information and documentation about the alert, including customer profiles, transaction history, and any relevant information he can get to make the investigation process smooth.
After gathering the information, Compliance officers analyze the collected data to identify any patterns or connections that suggest money laundering or other illicit activities occurred. At this stage, the compliance offices may review related accounts, historical transactions, and external information such as adverse media reports.
- Case Documentation
Without proper documentation of the case, including all the evidence and related information, the compliance team can not pursue their case successfully. Therefore, at this stage of the case management process, documentation is created against all findings and evidence. After documenting the case study, Investigators write a detailed narrative report summarizing the investigation, including key findings and recommended actions.
- Decision Making
Suppose an investigation finds that any potential activity related to money laundering has been done. In that case, the junior compliance officer must make sure that he refers the matter to the senior compliance officer or law enforcement agency for further investigation.
Based on the findings, the institution decides on the next steps, which may include monitoring, freezing accounts, or filing a Suspicious Activity Report (SAR).
- Ongoing Monitoring
Financial institutions face challenges, particularly when dealing with criminal activity. They must remain updated continuously by monitoring and reviewing their customer statuses.
Consequences of falling short of AML Case Management Solution
Falling short in implementing an effective AML (Anti-Money Laundering) case management solution can have numerous consequences for financial institutions and other regulated entities. Here are the critical consequences:
- Regulatory Pelanties and Fines
- Reputational Dameg
- Legal consequences
- Operational disruption
- Loss of business
Real World Example of noncompliance to AML Case management system
Danske Bank is the most prominent example in the natural history of a financial institution that failed to comply with the AML regulation, and its platform has been used for many years for money laundering and other financial crimes. Findings reveal that almost €200 billion in transactions was suspicious and went unnoticed due to the ineffective AML case management system. And you were surprised to know that the EO and other employees had to resign, and the bank issued millions of dollars in fines and reputational damage.
Is there any way to measure the effectiveness of AML case management?
the effectiveness of any compliance program, particularly the AML case management system, depends on the ability of the compliance team to assess how effectively they streamline the process and, most importantly, how the risk detection is compliant with regulatory compliance. However, one can measure the effectiveness by the rate of false positives and false negatives in the case management system of any organization and the workflow and how they utilize their available resource.
Facing compliance issue while managing AML cases within your organzition. AML Watcher could be your helping hand not only in giving the case management software to effectively manage the AML cases but also by saving you from compliance action. Don’t wait before its get too late.
