With Tranche 2 AML compliance deadlines fast approaching this July, businesses must strengthen their financial crime risk management frameworks.
Start With What You Already Know
The effectiveness of financial crime risk management is highly dependent on the data that underpins it. Consistent, complete and accurate data is essential for identifying and mitigating financial crime risks as it enables organisations to:
- Build reliable risk assessments that can be communicated and understood;
- Make informed and defendable risk-based decisions.
Your customer base, designated services and the channels through which they are delivered will provide you with the first indicators. This will guide you to determining the specific data, and the format of that data, that you will need so that red flags can be established and monitored in managing your financial crime risks effectively.
For example, if you deal with complex trusts on a regular basis, this may be an area requiring more granular risk indicators. Going into more detail in this customer segment can prevent the costly and unhelpful situation where all trusts trip a generic red flag and become high risk, making it difficult to see the forest for the trees. Conversely, you don’t want a highly complicated risk model for customer types that you rarely interact with, as that will generate a lot of analytic work for little to no risk benefit.
Data Integrity Is the Backbone of Risk Decisioning
Consistent and accurate risk data is necessary for effective risk decisioning. A common issue for Tranche 1 reporting entities has been difficulty in analysing and comparing risks across the business because data was often inaccurate, inconsistent or incomplete. A well-designed risk taxonomy and robust assurance processes for maintaining a high degree of data integrity will give you confidence in making risk decisions. It will also make it easier to explain risk decisions and defend them when necessary.
Lean on the Experts Before the First Transaction
Doing it yourself sounds simple, until you try turning data into trusted risk insights. The key to a successful risk-based AML/CTF program is the ability to demonstrate
that logical decisions were made based on accurate and reliable risk information and this requires a thoughtful data model design before you start collecting data from your first transaction.
Partnering with a trusted and experienced AML/CTF service provider like Aus AML will provide you with a reliable all-in-one service that integrates financial crime data management with a comprehensive risk management framework from the ground up. Our integrated AMLCO-as-a-service takes data reliability and communication to the next level — taking on the responsibility of analysing and documenting your risk and advising you on the best course of action, even in the trickiest situations. Our AMLCO will also be there to explain and defend the decisions made using our data- supported analyses if regulators come calling.
Not sure where your data model stands ahead of July? Talk to the team at Aus AML today.
