What does 2023 have in store for AML?


The pace of market change that financial institutions must endure is climbing, with every year posing new challenges and opportunities. What will happen in AML in 2023?

In a recent post, Eventus president Jeff Bell explained how he is reimagining AML as well as some of the top challenges compliance officers face today.

Market change for financial institutions is accelerating every year, with new regulatory proposals from the US SEC, faster money movement globally and added digital asset complexity all posing new AML vulnerabilities and challenges to compliance officers.

Bell explained, “A common challenge traditional financial institutions face is the rising number of banking relationships they manage. This increase may be due to recent acquisitions of other firms with their own settlement banking relationships, organic growth, or entering into new markets, like digital assets.

“Whenever there are multiple banking relationships managed in a fragmented manner, a firm cannot solely rely on its bankers for AML checks but instead has to have a full view of activities itself.”

The Eventus president said that markets saw this last year following the beginning of the Russia-Ukraine conflict, which restricted the amount of countries companies could do business with and saw a number of firms land on sanctions lists. This made for a different environment for compliance teams.

Bell said, “Despite these new challenges, much of the focus of AML teams remains on basic money laundering activities, and not on sophisticated scenarios. For example, a common, and simple, money laundering scenario is cash transactions moved underneath the currency reporting thresholds to avoid detection. This is basic AML.”

By integrating trade surveillance data into AML systems, many companies can have a more advanced view of AML scenarios that include trading and client activities, and therefore better monitor for suspicious activities that go beyond cash movements, deposits and withdrawals, and look further downstream to where clients are trading those funds.

According to Bell, this integration, along with the inclusion of signals-based technology to support alerts, is the crux of Validus AML, which is Eventus’ ‘reimagined’ platform for both traditional finance and digital asset companies.

Bell continued, “Firms need to have a better view of all trading activities to understand suspicious activity and look out for possible instances of market manipulation and insider trading – activities that are traditionally trade surveillance issues but also fall under the AML domain.

“Today, firms might file separate suspicious activity reports and then merge the two data sets together to get a fuller picture. With the Validus AML data integration, clients can have this broader view, explained Bell. If, for instance, a firm suspects market manipulation and wants to identify a party and activity from today, the system enables the firm to go back and look at previous money movements and activities.”

He concluded, “Ultimately, it is a compliance officer’s role to identify patterns and trends that come out from system alerts based on perceived riskier behaviors, which can possibly indicate financial problems that need further investigation and actions. Through the integration of trade surveillance data into the AML platform and the use of signals-based alerts, users are well equipped to more actively manage their AML operations today and improve monitoring capabilities ahead of any future market changes or events.”

Read the full post here.

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