Regulators are increasingly demanding greater evidence of well-developed anti-money laundering compliance programs, processes, and systems and controls, and yet global companies are struggling to keep pace with it all.
Compliance officers today must not only contend with complex and ever-evolving regulations both from a domestic and international standpoint, but also ensure that their AML compliance programs keep pace with ever-changing sanctions and a much larger volume of watch-lists. The associated risk of politically exposed persons (PEPs) and third-party vendors also pose risks.
Today, companies have available so much information that it makes it even more difficult to get to the right and relevant information. “The amount of data that firms must gather during due diligence processes has increased significantly, and with more incoming and changing regulations likely over the coming years, plus the continued growth of data available via the Internet, this is set to get worse for due diligence practitioners,” said David Buxton, chief executive officer of compliance analysis firm Arachnys.
Such factors are driving the demand for better, faster, and more accurate due diligence solutions. According to a webinar poll of 131 compliance professionals conducted by Arachnys and risk technology research firm Chartis, 50 percent said the greatest challenge posed by their existing due diligence practice is insufficient and inconsistent availability of quality data and intelligence. Another 32 percent cited inconsistency of approach across teams and siloed systems.
To a much lesser extent, other challenges posed by existing due diligence practices cited by compliance professionals were inefficiency in preparing reports, difficulty in auditing reports, and board-level sponsorship.
The poll also asked compliance professionals what percentage of analyst time is spent creating reports and audit trails. Almost half (44 percent) said 30% to 50% of the time, while 31 percent said 10% to 30% of the time. Twenty-one percent said more than 50% of the time.
The poll also found that many compliance teams believe they can significantly gain efficencies by standardizing workflows across jurisdictions. The plurality of respondents (approximately 24 percent) said they believe their companies will realize between 10% and 30% efficiencies through standardization of workflows across jurisdictions, while 15 percent said they believe they’d realize between 30% and 50%.
Although process standardization can be achieved without technology, automation of global processes and standardization can have a significant impact on the efficencies gained across globally dispersed teams, according to Arachnys. “Technology and automation enables the immediate performance measurement and visibility needed to drive improvement and best practice enhanced due diligence across the enterprise,” Arachnys said.
Compliance teams were evenly divided on what sorts of technologies might have the greatest effect on compliance efficiency over the next three years. Twenty-four percent said workflow standardization and content aggregation, while 23 percent said software usability and efficiency. Another 21 percent said automated report and audit trail generation, while 20 percent said automated checks and analysis. Only 12 percent said advanced language capabilities.
Access the speaker slides and the Arachnys/Charter webinar recording here.