While digital transformation has created an opportunity for companies to transform their business, expand their operations, and move them online, it has also opened new doors for illegal activities such as money laundering and financial fraud. Criminals and fraudsters will take every advantage to get ahead in their illicit activities, and so should you. Discover what will happen with anti-money laundering (AML) practices in 2023 and how you can use it to make your business more secure.

Prepare for the future of anti-money laundering (AML)

New anti-money laundering and countering the financing of terrorism (AML/CFT) regulations are constantly being introduced, leaving businesses struggling to keep up, especially considering the regulations differ around the world. With new technological trends rapidly reshaping business practices and how financial crime is committed, businesses need to start preparing for the future. What better way to prepare for the future of AML than by looking into its past?

While there have always been malicious actors trying to exploit businesses for their own profit, money laundering became a part of the financial crime landscape only in 1970 when the Bank Secrecy Act (BSA) was introduced. The truth is that throughout history, dealing with money laundering crimes was done reactively instead of proactively. Once the new regulations are introduced, financial institutions react to them and update their security strategies. This can make AML systems slow and outdated while leaving institutions and their employees quite confused as various departments end up being in charge of different elements. These issues can cause financial crimes to go unnoticed until it is too late.

AML strategies of the future need to take a closer look at past issues and work towards mitigating them if they want to create effective and proactive solutions.

What can we expect from AML in 2023?

Global money laundering annually deals with losses of around $1.6 trillion due to money laundering worldwide. Considering how good criminals are at exploiting our weaknesses, the number will only get higher. This is why in 2023, we need to concentrate on fixing the mistakes from the past and embracing technological advancements that can allow us to stay ahead of criminals and prevent their illegal activities.

We first need to realize that for any cybersecurity strategy to work, it needs to embrace all the elements that make it whole and effective. While AML is a good start, only when combining it with other cybersecurity elements, such as KYC or a digital footprint, can it become fully effective. While AML and KYC might seem similar, key KYC AML differences make them most effective when combined. While regulations dictate both, AML covers a broad category of laws aimed at preventing money laundering, and KYC concentrates on verifying the identity of prospective clients.

If we want AML of the future to be effective, it needs to be technology driven. The technological market, especially the area of cybersecurity, is filled with new advancements and applications that can make a significant difference in any AML strategy.

  • Artificial Intelligence (AI) can allow businesses to analyze data in real-time and detect any discrepancies that might indicate fraudulent activity, such as money laundering. Implementing it can reduce the number of false positives and use historical data to recognize any suspicious behavior while keeping up to date with the newest trends due to the self-learning aspect.
  • Machine learning can be used for risk analysis and determining every customer’s risk factor, allowing you to make informed decisions.
  • Network analytics helps you to determine any irregular or unusual money flow, making it easier to recognize the red flags indicating money laundering.
  • Verification systems can be used to verify the customer’s identity and to confirm they are who they claim to be, not illegal actors.

Conclusion

Illegal actors are never going to stop trying to use us for profit; the only thing we can do is to stay ahead of them and prevent them before they can cause any damage. Embracing new technology is the key to creating effective AML solutions that can safely lead us into 2023.