What Will AML Compliance Look Like in 2021?


What a year 2020 was. Who would have expected, in January 2020, that by March most countries around the globe would be shut down to varying levels for the rest of the year. 2020 was a tipping point in the acceleration of digital transformation and the increased use of technology to aid effective and efficient compliance programs. The effects of COVID-19 will still be felt well into 2021. Those effects will continue to ripple out into the world of financial crime and compliance for at least the next year, resulting in a seismic shift in how compliance programs are governed, staffed and what technology is employed to ensure efficacy.

With that said, here are some predictions for 2021.

Prediction 1: Smaller, leaner and more adaptable compliance teams
As most organizations have been adversely affected by the pandemic, this has resulted in either a reduction in revenue or greater uncertainty about future revenue streams. Naturally this has caused budgets to be cut, including compliance budgets.

In 2021, organizations will speed up the convergence of their compliance functions and will begin to introduce risk intelligence investigators. These will be multi-skilled investigators who are comfortable investigating an AML alert, a fraud alert, a screening alert, conducting a KYC review, or a mix thereof.

Reducing staffing, converging functions and multi-skilling investigators will only be possible with the introduction of new technologies that can significantly reduce alert volumes and manual actions by investigators.

Prediction 2: Faster adoption of advanced technologies
Technology will transform the compliance landscape in 2021, making it a slicker, more effective, resilient and efficient machine. This will become a competitive advantage to organizations. Why? Because a compliance team that can adapt by quickly onboarding customers, identifying only truly suspicious behavior and investigating any activity quickly and accurately will reduce friction for legitimate customers. This will result in a better customer experience, increased loyalty and business revenue. In these tough times, this is crucial.

Onboarding will increasingly become digital and performed remotely, requiring advanced technology to manage the compliance risks. Activity monitoring has, for too long, resulted in lots of noise. AI will be employed at scale to reduce the noise and direct only real suspicious behavior to investigators, and ML and automation will help improve investigators’ efficiency and accuracy. This will result in quick but accurate disposal decisions.

Prediction 3: Quality, not quantity
There will be renewed vigor to increase the quality and reduce the quantity of SARs filed by the regulated sector to FIUs in 2021, especially in light of the September 2020 FinCEN leaks. This will include guidance or requirements issued for better quality SARs to be filed, potentially by reforming the SAR form to include additional essential details, but also improving the analytics within FIUs to better analyze the received SARs. This will help improve not only suspicious activity detection, but also improving SAR quality and standards.

Prediction 4: Convergence of compliance
This is something that has been discussed for a number of years now: bringing together fraud, AML, sanctions and CDD under one unified hub. A move to unification of the compliance functions will continue into 2021 and it makes sense to have a unified view of risk of your customers. This will allow organizations to better detect suspicious behavior, and investigate this behavior more quickly and accurately while achieving higher quality outcomes. By converging compliance functions and front office functions into one place, organizations will be able to view and share information quicker and make more informed decisions on high risk activities or alerted events.

Prediction 5: Extensive adoption of biometrics
Asking a customer to walk into a branch to present documentation or paperwork has been difficult, if not impossible over the last several months. As a result, digital onboarding and remediation has become the norm and biometrics will increasingly play a big part in this. 2021 will see extensive and increased adoption of facial and voice recognition as a way of identifying and verifying customers.

2021 is going to be an exciting year and one topic is going to dominate—digitization. Financial institutions will be able to work smarter, not harder by reducing costs and increasing their efficiency.