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Research Details FIs' Efforts To Improve AML Detection
BOSTON (6/19/13)--Financial institutions (FIs), including credit unions, are responding to intensifying pressure to identify money laundering by improving their anti-money laundering (AML) detection efforts, according to Aite Group and Early Warning  joint research released Tuesday.

"There is a strong need for more dynamic and real-time data-sharing capabilities both within and among financial institutions," said Julie Conroy, research director in retail banking at Aite Group.

"[Financial institutions] should use improvements in technology to eliminate the clunky and often bureaucratic processes that characterize the sharing of data, and become more dynamic and proactive in their AML detection capabilities. Some early movers in the U.S. market are doing this," she said.

At Early Warning's request, Aite Group interviewed eight financial crime executives from the top 30 U.S. depository financial institutions from May 2012 to June 2012, and 11 financial crime executives from eight of the top 30 U.S. depository financial institutions by asset size between March and April.

Most FIs report that they feel regulatory pressure to focus on AML. At the same time, they face challenges to meet revenue growth goals that impact all cost centers, including compliance. In light of that, FIs report that they are continually examining their AML efforts and seeking creative options to improve both their efficiency and effectiveness.

The number of AML alerts worked by financial institutions went from about 5.76 million in 2009 to an estimated 6.89 million last year.  By 2016, that number is expected to rise to about 10.36 million, Aite Group said.

Technology is seen as key to those efforts across the financial enterprises surveyed, because it enables not only a holistic view into customer activity, but also facilitates collaboration between fraud and AML groups, Aite's report said. That in turn creates opportunities for efficiency while also improving detection and compliance.

"This study demonstrates that with the rapid rise and sophistication in criminal activity, it is more critical than ever that financial institutions fully leverage the benefits of advanced analytics, cross-institution collaboration and information sharing," says Paul Finch, CEO of Early Warning.
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