While compliance is critical to meeting regulatory demands and avoiding penalties, true success goes beyond just adhering to the rules. Efficiency and effectiveness in AML programmes are just as important. An efficient system reduces unnecessary work, and an effective one ensures that suspicious activity is detected and reported. Through practical tips and insights, we’ll guide you in enhancing your AML operations by leveraging Jade ThirdEye to not only meet your compliance obligations but also optimise your workflow.
Compliance is more than a regulatory requirement; it is essential to maintaining your business’s integrity and success. Auditors and regulatory bodies evaluate your adherence to a detailed set of laws, and the implications of non-compliance can be serious. The outcome is definitive, you are either compliant, non-compliant or partially compliant against each item in a raft of rules. Failure to comply can result in severe fines and/or the need to undertake a remediation programme.
Efficiency is less black and white than compliance and works on a scale from very efficient to very inefficient. AML teams are often stretched, with a small team faced with a mountain of tasks. It is important that you focus your time on the tasks that really matter and are not hampered with tasks that are low priority or could be automated.
Effectiveness is more ambiguous. If we go back to the purpose of the AML/CFT law rather than looking at the content, we can define an effective AML/CFT programme as one that detects financial crimes and reports them to the local FIU (for example, AUSTRAC). The ultimate outcome being to reduce the level of crime and thereby make the country a safer place to live.
Compliance starts with your risk assessment. Once you have this in place, we will work with you to ensure that Jade ThirdEye is set up to address your risks, by creating transaction monitoring rules to meet your unique situation. We will provide you with training to help you set up the processes that your team should follow to maintain compliance. But just because you have a compliant programme doesn’t mean that it is efficient or effective.
Lots of people use manual processes or simple tools like Excel. In these situations, a purpose-built tool like Jade ThirdEye can drive a step change in efficiency.
If you are already using a purpose-built tool the inefficiencies may be more subtle. A major area of inefficiency is false positives. I've covered this topic and strategies to reduce them in another blog: How to reduce false positives in your AML programme. A key takeaway is to make sure that you identify and address false positives. I have seen too many cases where people suffer the impact of false positives, but don’t do anything about it.
If you switch from a manual to an automated system, it should increase your efficiency and also enhance your effectiveness. An automated system can pick up patterns of activity that you would find impossible or difficult to detect manually. This lets you extend your programme to detect a wider range of financial crimes.
If you are already using a purpose-built tool, you should look at what is being effective and see how you can build on that knowledge. A good place to start is any suspicious activity reports that you have submitted. Did your rules pick these up directly or was further analysis required? Does this indicate rules that you could introduce to pick up the pattern detected directly?
Jade ThirdEye has a rules effectiveness report. This is a first step in identifying which rules are effective and which are not. It also helps to improve your efficiency by identifying rules that are just raising false positives that are consuming your valuable time.
The final question is which of these should you focus on: compliance, efficiency or effectiveness?
A board or senior management team might look at priorities and state that you must comply, you need to be as efficient as possible, and it would be nice if you were effective.
I contend that it is not a question of which is the priority. Instead, you should work out how to make them all so important that you adapt your system and processes to always keep a focus on each of them.
You should report on effectiveness to your board and the impact of being effective. That helps them to understand that you are providing a valuable service by protecting your customers and reducing the level of financial crime flowing through your business.
At Jade ThirdEye, we are committed to collaborating with you to ensure your AML programme is set up for success. By focusing on compliance, efficiency, and effectiveness, we help you navigate the complexities of the regulatory landscape. Together, we’ll implement tailored solutions and ongoing support, empowering you to protect your business and meet your compliance obligations with confidence, whilst ensuring your use of Jade ThirdEye is efficient and effective.