An alert in a bank’s transaction monitoring system notifies that there is a large amount of money being transferred to and from a local restaurant in a county in Linn County, Oregon. What does this mean? Is this a false positive alert or is there actually something risky going on? These are the questions that Anti-Money Laundering (AML) Analysts must contend with on a daily basis.
An AML Analyst’s primary role is to investigate the suspicious activity of clients at banks and other financial institutions. Often they work in tandem with automated transaction monitoring systems that are able to parse through all of the institution’s transactions and separate those that meet certain parameters. After receiving the alerts, the Analyst then must determine whether any of these warrant further investigation or were caught in the system as false positives. Without the professional insights from the Analyst, an appropriate risk-based approach would not be possible and crime and fraud could easily slip through the cracks.
Sometimes referred to as part of the “second line of defense” against money laundering, analysts are a critical part of any financial institution’s operations. Clearly, having shortcomings in financial crime detection and mitigation can be a costly affair. According to Finbold’s Bank Fines Report 2020, major financial institutions racked up over $14.2 billion, with anti-money laundering breaches being the most common violation. Goldman Sachs received the largest fine of $3.90 billion for AML breaches related to the Malaysian 1MDB scandal. However, fines and penalties are pertinent to a money service business of any size and their importance is only growing. As Finbold’s chief editor Oliver Scott noted, “Fines on financial institutions are projected to grow in the coming years, as the U.S. and other countries reform existing regulations while increasing sanctions with anti-money laundering regulations remaining a key enforcement priority.”
In order to keep up with a shifting regulatory landscape, avoid penalties and conduct business in a moral and prudent manner, financial institutions rely on AML analysts to detect and investigate suspicious activity.
Since there is so much information to go through, analysts must be provided with technology platforms that can access, aggregate and sort through vast amounts of data. Much like a skilled carpenter cannot finish a project without a hammer or a saw, an analyst cannot be successful without their appropriate tools. Sigma works to ensure that the AML analyst is equipped with what they need to conduct investigations.These tools give them visibility into the entity for which an alert was generated and can then make the call as to what the business should do next. As the review of 2020 shows, this work can be worth billions.
But what about the Oregon restaurant?
It was through the work of analysts, leveraging information systems and good old fashioned investigative work, that helped law enforcement break up an illegal drug ring and make 11 arrests in the area. Indeed, the work of analysts extends beyond just the bank and it is imperative that those of us who refine the tools in the analyst toolkit continue to support those efforts.