Jade Thirdeye AML compliance blog

A Deep Dive into Balancing Compliance, Efficiency, and Effectiveness in your AML Programme

Written by Colin Dixon | 8 Dec 24

When it comes to an AML programme, three words often come to mind: compliance, efficiency, and effectiveness. Striking the right balance between these is a challenge I’ve encountered repeatedly in my 12 years with Jade ThirdEye. From working with organisations across Australia, New Zealand, and the UK to demonstrating our software to prospects, I’ve noticed a recurring theme:

Compliance is always top of mind, with questions like, “Does the system meet this requirement?”

Efficiency follows closely behind, with queries about how easily users can manage their workload or minimise false positives.

However effectiveness—ensuring the programme delivers meaningful results—rarely gets discussed.

So why is that? If asked directly, everyone would agree they want an effective programme, yet it often takes a back seat. This blog is about rethinking that balance—not prioritising one over the other but embracing a holistic approach: compliance, efficiency, and effectiveness.

What Do We Mean by Compliance, Efficiency, and Effectiveness?

Here’s how I define these terms:

Compliance: Action in accordance with a command or law

Efficiency: Achieving the maximum output with the least amount of input

Effectiveness: The degree to which something is successful in producing a desired result

Each of these is independent—you can succeed in one without excelling in the others. However, a robust AML programme requires all three to work in harmony.

Compliance: The Foundation

Compliance is straightforward—it’s about following the law. Your programme must meet regulatory requirements, and your software should support you in achieving this. Measuring compliance is relatively simple: auditors and regulators will assess whether you meet the standards, and they’ll highlight areas that need improvement.

Non-compliance comes with significant risks, including audits, penalties, and reputational damage, so it’s no surprise that compliance often gets the most attention.

Efficiency: Doing More With Less

For AML teams, efficiency is about completing tasks accurately and on time, often with limited resources. Senior management sees efficiency as reducing overall costs—whether through staffing, tools, or automation. Purpose-built AML software, like Jade ThirdEye, is a powerful way to improve efficiency, especially for larger organisations handling significant data volumes.

Let’s assume you’ve justified the use of purpose-built software, and it’s effectively helping your programme remain compliant. The next question is: how can you improve efficiency? Efficiency is more than just adopting technology; it’s about examining your processes and making targeted changes that fit your unique situation. Here are some ideas to get started.

False positives

False positives are one of the most common efficiency challenges I hear about. Many organisations struggle with high volumes of false positives, but surprisingly, they often fail to take action to address the issue.

For example, I worked with a client who had been dealing with excessive false positives for years but had made no attempt to resolve the problem. After a short consultation, we were able to significantly reduce their false positives with minimal effort—mainly by identifying inefficiencies in their process and asking the right questions to prompt action.

In contrast, another client regularly reviews their false positives every month and encourages team members to flag issues as they arise. This proactive approach has allowed them to maintain a far more efficient programme.

The takeaway? Addressing false positives requires consistent action. Without it, inefficiencies will persist, costing your team valuable time and resources.

Lack of action

Efficiency improvements don’t happen on their own—you need to take deliberate steps to make them happen. In fact, if you do nothing, your programme is likely to become less efficient over time as processes stagnate and inefficiencies compound.
A great way to counteract this is by periodically stepping back from the day-to-day grind to evaluate your entire programme. Involve your team in this process—they are the ones engaging with the tools and processes daily and can offer valuable insights you might not be aware of. Not only will this help identify areas for improvement, but it will also create a more engaged and motivated team.

Knowledge

Staff turnover is a constant in this industry, and with it comes the challenge of retaining institutional knowledge. This is becoming an even greater concern as AML programmes expand with new legislation, such as Tranche 2 in Australia, stretching the pool of AML professionals even thinner.

To maintain efficiency, invest in training—not just for new team members, but for everyone. When I visit clients, I often find that inefficiencies stem from teams not fully understanding how to use their software or processes effectively. This is rarely a reflection of the software itself but rather a gap in knowledge transfer.

Encourage a culture of continuous learning within your team. Nobody knows everything and even experienced staff can benefit from revisiting best practices or learning new features. A knowledgeable, well-trained team will not only work more efficiently but will also feel more confident and empowered in their roles.

Using a risk-based approach

The AML regime is built on a risk-based approach, which means focusing more time and resources on higher-risk areas while scaling back on lower-risk ones. This principle can also guide your efforts to improve efficiency.

For lower-risk areas, consider whether you need to invest significant resources. Can you justify doing less, if the risk is managed appropriately? Just remember: low risk is not the same as no risk. Monitor these areas to ensure they don’t slip through the cracks entirely.

Measuring efficiency

One common mistake is assuming that working quickly equals working efficiently. For example, I’ve heard clients boast about processing a high number of alerts in a day. But are they being efficient, or are they simply rushing through tasks? Or perhaps the alerts are too easy to close because they were poorly configured to begin with.

True efficiency isn’t just about speed; it’s about the quality of your outcomes relative to the effort invested. To track efficiency improvements, start by establishing a baseline—your current state. Any changes you make should be measured against this baseline to determine whether they’ve delivered tangible benefits

Effectiveness: The Often-Overlooked Goal

Effectiveness is a somewhat ambiguous concept, as it’s less tangible and more subjective than compliance or efficiency. At its core, effectiveness is about successfully producing a desired result. However, this raises two critical questions: what result are you looking for, and how do you define success?

Effectiveness is becoming increasingly important. Australia’s FATF mutual evaluation in 2026 will assess the AML regime not just for compliance but also for effectiveness. Additionally, proposed legislative changes place the responsibility for both compliance and effectiveness squarely on the shoulders of senior management.

Yet, despite this increasing importance, there’s little clarity about what effectiveness means in practice.

What Does Effectiveness Mean?

For an AML team, defining effectiveness isn’t straightforward. Broadly speaking, there are three perspectives to consider:

  1. Protecting the Country
    Start by looking at the purpose of AML laws. These laws aim to detect and disrupt financial crime, ultimately reducing criminal activity and making the country safer. An effective programme identifies and reports financial crimes with accuracy and detail. The goal isn’t to produce as many reports as possible but to ensure the quality and relevance of those reports. For instance, an organisation that submits one detailed, actionable report is more effective than one that floods the regulator with vague or unnecessary reports while missing critical criminal activity.
  2. Protecting the Organisation
    From a senior management perspective, an effective AML programme is one that addresses key risks, complies with regulations, and protects the organisation from fines, reputational damage, and regulatory scrutiny. A programme can’t be considered effective if it doesn’t also meet compliance requirements, but it goes beyond compliance by mitigating risks that could harm the organisation.
  3. Protecting the Customers
    Your customers interact with your compliance measures, and they have their own perspective on effectiveness. While they may tolerate KYC checks and authentication protocols for the sake of security, they expect their money and personal data to remain safe. An effective programme safeguards customers from fraud and other financial crimes, which in turn helps to build trust, retain customers, and avoid the financial and reputational costs of compensating affected customers.

An effective programme, therefore, achieves three overlapping objectives: it protects the country, the organisation, and the customer.

Training for Effectiveness

Much like efficiency, effectiveness requires continual learning and adaptation. While training is often associated with improving efficiency, it’s equally crucial for fostering effectiveness.
Training should focus on helping team members understand what an effective programme looks like and how their actions contribute to its success. Discussions about effectiveness shouldn’t happen only during annual reviews or audits—they need to be ongoing. By aligning processes and daily tasks with effectiveness goals, your team can remain focused on what truly matters: detecting and preventing financial crimes.

Remember, most people in this field are motivated by a desire to stop criminal activity. The challenge isn’t motivation—it’s focus. Regular discussions and clear alignment of tasks with outcomes can help your team achieve that focus.

Stories of Effectiveness and Ineffectiveness

Sometimes, real-world stories illustrate the concept of effectiveness better than definitions can.

Effective Programme: Detecting Patterns of Financial Crime

At one mid-tier financial institution, Jacqui, a team member, spotted an unusual alert triggered by a mule activity rule. A 20-year-old student had opened a savings account, deposited $20, and soon after withdrew $15. A few days later they received $8,000 and transferred $7,800 to an external party at another bank.

Recognising the pattern of mule activity, Jacqui flagged the account and submitted a Suspicious Matter Report (SMR). But she didn’t stop there—she created new rules to identify similar activity. This uncovered additional accounts tied to the same external recipient, enabling the institution to freeze accounts before more fraudulent transactions could occur.
This proactive approach not only detected crime but also prevented future incidents, showcasing how an effective programme can protect the organisation and its stakeholders.

Ineffective Programme: Missing Customer Fraud

Contrast this with the story of an elderly neighbour who entrusted her daughter-in-law with access to her bank account. Over time, the daughter-in-law misused the account, purchasing luxury items while the elderly woman struggled financially in her final years.

An effective AML programme would have flagged the unusual spending patterns and intervened to protect the customer. This highlights how ineffectiveness can harm vulnerable individuals and undermine trust in financial institutions.

Measuring effectiveness

Effectiveness is difficult to quantify, but that doesn’t mean it’s impossible to measure. The key is to focus on meaningful metrics that drive the right behaviours.

For example, submitting more reports isn’t a reliable measure of effectiveness. It’s easy to inflate numbers by submitting low-quality reports, which only wastes regulator’s resources. Instead, focus on improving the quality of your reports. The person reviewing reports before submission is best positioned to assess whether they provide actionable insights.

To improve effectiveness:

  • Define what success looks like in your programme
  • Set targets that encourage the behaviours you want to see, not just arbitrary metrics
  • Use tools to monitor progress, but don’t rely solely on software—commit to regular team discussions and reviews

Key Takeaways

I hope this blog has sparked some ideas and prompted you to think critically about your AML programme. My aim isn’t to provide all the solutions but to encourage you to reflect on how these insights apply to your specific situation.

If you walk away with just three key points, let them be these:

  1. Effectiveness matters: It's a crucial aspect of your programme that often doesn’t get enough focus.
  2. Find the balance: Align compliance, efficiency, and effectiveness to suit your organisation’s needs.
  3. Continuous improvement is key: You don’t need a major project—small, consistent improvements can drive big results.

If you’re ready for more, here are six additional thoughts to take away:

  1. Improvements require action: Programmes won’t fix themselves. You need to dedicate time and effort to drive progress.
  2. Degradation happens naturally: Programmes can stagnate or regress if left unchecked—stay vigilant and adaptable.
  3. Good data is essential: Quality data underpins effective programmes. Poor data leads to poor outcomes.
  4. Measure the right things: Define success carefully. Your metrics should drive the behaviour you want.
  5. Engage your team: Actively involving your team fosters engagement and uncovers valuable insights.
  6. Collaborate with peers: Learn from others in the industry—whether through conversations, events, or forums.

Take these lessons and consider how they can make a meaningful difference in your work. Small, intentional changes can lead to substantial improvements over time.

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