Anti-money laundering (AML) regulations are continually evolving in response to the threats of financial crime. But is there anything we should, and could, be planning ahead for? Here, Richard Devine, Account Director at Veriphy, shares his predictions for the future of AML compliance.  

Money laundering is estimated to cost the UK over £100 billion each year at present according to the UK government. With figures this high, and data revealing that global anti-money laundering fines have surged by 50% since 2008, it’s unsurprising that organisations around the world are taking measures to tighten their security against financial crime.  

But with fraudsters raising the stakes with tools that match the power of RegTech, what could the future of AML compliance look like? Let’s explore the possibilities.

1. A multi-faceted, regulated space

There’s no denying that AI and automation are the new normal—and will remain so in the future now we are beginning to properly leverage their power. Together, they will allow for operational resilience, exponential efficiencies growth, and scrutiny levels within due diligence processes that are beyond even our smartest current systems. Similarly, these technologies will help power multi-solution compliance ecosystems, enabling the best outcomes via the best product routes within an orchestrated checking environment. 
 
But one thing we’re yet to see, is what impact AI can have if it goes beyond the margins. With more and more people discovering new uses for AI, the need for regulatory and operational controls will become increasingly apparent. 
 
So, while AI will most definitely continue to thrive in the tech space, this will require those responsible for its operations to retain full control. To ensure this happens, we’ll need to see more flexibility factored into compliance tools, allowing for that control to be actioned at any given time. Above all, it’ll be crucial that compliance remains true to its key goal; to permit the greatest economic benefits within the safest possible spaces.  

2. A landscape dictated by generational demands

Building on the post-pandemic restructuring of business and social practice, generational change will continue to affect expectations and demands relating to CX at client- and end-user levels. With Gen Z increasingly established within the workplace and the broader economy, there is already pressure to create more digital-first experiences, seamless onboarding, and to ensure organisations are acting ethically and with due diligence—and these are factors I predict will remain central to customer journeys.  

Now that so many customers know what efficiency looks like, particularly from a digital-first standpoint, we’re likely to see much more demand for this. For AML compliance processes, this means removing the necessity for in-person identity verification checks, and more streamlined systems that can complete the checks immediately. Without considering generational demand for quicker, smarter software to push things forward, organisations in the future run the risk of high customer churn—and at a much more accelerated speed than at present. 

3. A sector ruled by rapidly responding RegTech

Just like tech itself, fraud is a growth industry, with criminals constantly finding loopholes and new tactics to match that of regulatory tech. As fraudsters develop more intelligent tools, we’re undoubtedly going to see greater demands on firms to prove they have robust RegTech defence mechanisms. 

For compliance service providers, this means arming their clients with intelligent anti-fraud products. With tighter regulations and harsher penalties already coming to fruition, the practical importance of ensuring robust RegTech will remain critical to the protection of businesses and their customers. It will be imperative to avoid procedural shortcomings within PEP and sanctions and source of funds checks, which otherwise would be heavily penalised and carry risk of both financial and reputational loss.  

Looking at how current threats for RegTech are being handled, there’s every suggestion that as the threats mature, so will the need for stronger regulatory technology. And as such, firms will expect, and be expected, to exclusively utilise compliance systems that can move as quickly as real-world legislation, while enabling full understanding of identity, entity ownership and control structures. 

The future of compliance tech looks bright. But with future threats looking far more complex and leveraging ever more powerful intelligence, AML compliance will need to be proactive, responsive, and more robust than ever.  

Contact us today to find out more about how we can help you. 

Author

Richard Devine

Solutions Consultant

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