As financial regulators continue to increase AML regulations, the cost of remaining compliant is getting higher. According to the experts, these AML compliance costs are set to grow at an increasing pace, so how can businesses in the financial industries combat this? In this guide, we will discuss some effective strategies for reducing the cost of AML compliance.
Why Is AML Compliance So Expensive?
AML compliance is a costly endeavor for many businesses in the financial industry. One of the main reasons for this is the increasing complexity of regulations and the ever-evolving criminal tactics used to launder money. Money launderers are constantly devising new ways to circumvent existing controls, and regulators are under pressure to keep up. Consequently, AML regulations are becoming more extensive, with stricter reporting requirements and heavier fines for non-compliance. This puts a significant financial burden on businesses that must invest in the necessary technology, personnel, and processes to meet these demands.
Conduct a Risk Assessment
Conducting a risk assessment is a crucial step in cutting the cost of AML compliance. By conducting a thorough assessment, businesses can identify and prioritise areas of high risk, enabling them to allocate their resources more efficiently. This approach not only helps businesses comply with AML regulations, but also ensures that they are not overspending on compliance measures that may not be necessary.
In order to conduct an effective risk assessment, businesses should first identify the types of risks they face, including those associated with their customers, products, and geographic locations. They should then assess the likelihood and potential impact of these risks, using this information to determine their overall risk profile. With a clear understanding of their risk profile, businesses can then prioritise their compliance efforts, focusing their resources on the areas of highest risk and taking a more streamlined approach to compliance in areas where risks are lower. This targeted approach can ultimately help businesses save time and money, while still meeting their AML obligations.
Invest In Training
One of the most effective ways to cut the cost of AML compliance is to train staff on what they need to do. Yes, staff training is expensive for a number of reasons but it can be worth the extra cost in the end. When your staff understand what is expected of them, they can stay ahead of the regulations and avoid any major issues. Additionally, a well-trained workforce can easily train new staff to keep everyone on the right track.
Investing in staff training can not only help reduce the risk of non-compliance but can also lead to a more efficient and effective AML program. This can lead to cost savings in the long term and even improve the overall productivity of the organisation.
Better Data Management
If you aren’t managing your data effectively, you could find that the cost of AML compliance soars. With better data management, you can ensure that everything is as it should be and often, new technology is a good way to achieve this. Data management is all about keeping track of things and having processes in place for any red flags.
Effective data management can help identify potential money laundering activities early on, allowing organisations to take action and prevent illicit activity. This can help reduce the risk of regulatory fines and penalties while improving overall AML program effectiveness.
Look into data management tools to save time and money while also remaining compliant with the AML regulations.
Stay Up to Date
You could find that you are spending more on AML compliance because you are not on top of the changing regulations. These regulations can change and become stricter relatively frequently and if you wait to comply with the regulations all at once – the cost could be greater. By spreading out the workload and staying on top of any changes, you can cut the costs of AML compliance easier than you think.
It’s important to stay up-to-date with regulatory changes and adjust AML programs accordingly. This can help organisations avoid non-compliance and mitigate the risk of regulatory fines and penalties. Additionally, staying up-to-date with the latest AML trends and technologies can help identify new opportunities for improving AML program efficiency and effectiveness.
Partner with Experts
Partnering with experts like Neopay, can also help to reduce the cost of AML compliance. Compliance experts can provide guidance on regulations and help to identify areas of risk within your organisation. They can also provide training and support to ensure that your staff is equipped with the knowledge and skills necessary to stay ahead of regulatory changes.
By partnering with compliance experts, you can benefit from their experience and knowledge and reduce the risk of costly compliance issues. This can ultimately result in significant cost savings for your business.
Use the Right Technology
Incorporating technology can significantly impact the overall cost of AML compliance. Utilising technology can make the compliance process easier and reduce the resources required, ultimately resulting in cost savings. Recent reports show that firms that utilise more advanced technology and data systems tend to incur lower compliance costs. These firms also expect compliance cost growth to be slower than for other firms, which suggests that data and technology plays a crucial and effective role in helping firms reduce the cost and burden of AML compliance.
How 123signed can help
Our 123signed technology takes a multi-layered approach to financial crime compliance, ensuring your regulatory AML and monitoring requirements are covered in a quick and easy process. Incorporating KYC and KYB processes, and an efficient transaction monitoring system, 123signed allows you to identify fraudulent activity during the onboarding process in real-time. As an automated tool which aggregates multiple solutions, 123signed provides everything you need in one cost effective application. Contact us today to find out more.