Mateusz Pniewski

CEO @ TransactionLink

4 Major Issues faces by AML officers

AML officers have many challenges in their day to day jobs. The following are some of the greatest issues compliance officers are currently facing.

AML officers have many challenges in their day to day jobs. All types of businesses, from large corporations to government organisations, rely on their AML officers to keep them compliant with rules and regulations within their industry and country. Compliance also means monitoring workflows and maintaining high reporting standards. As the compliance industry matures and grows, rules and regulations change, and more issues come to the surface around fraud, mistreatment of data, etc. This means that an AML officer’s role is never static, it’s ever changing and dynamic.

As the stakes are high for businesses, making changes to onboarding flows, purchase flows, and data captures, need to happen very quickly once a new standard comes into play. Waiting even one day may result in hefty fines. Most of the time though, this is a classic case that is fraught with issues for AML officers.

The following are some of the greatest issues compliance officers are currently facing:

Lack of IT Resources

A decade ago, AML officers lacked the tools necessary to digitise the complexity of their workload. They managed their compliance requirements in a setting that required manual work to populate basic office productivity tools like spreadsheets, emails, and paper forms. To find missing compliance documents was an ordeal. Compliance officers needed to search for copies of compliance records, verification documents and KYC forms on many different computers, in filling cabinets and more in order to re-access the risk a certain client possesses. As you could imagine this took days, and even weeks to complete.

Then the age of digitisation and automation set in and things moved faster. But so did the technology advancements and AML solutions. For better transparency, accountability, and quick decision-making, digital tools now assist in managing, organising, and analysing data. But there’s a cost of this, and that cost is IT resources. One of the major issues AML officers face now is engineering resources to help update workflows to stay compliant.

It’s a no-brainer that tools like fraud detection software and ID verification APIs have given staff time back to do important tasks. Some of these tools automate processes, create reports in real time, and allow AML professionals to analyse all their information in one centralised space. But making small changes to processes could take weeks or months depending on engineering resourcing. This can be detrimental to the company’s brand and profits.

Lack of Buy-In from C-Level

Another major issue that AML officers face is that C-level staff may treat compliance as a checkbox exercise. They forget about it once it is done. AML compliance needs to be an ongoing process for it to be successful. When it is not ongoing, it exposes the organisation to the possibility of significant non-compliance fines, and reputational harm. What’s worse, criminal conduct might be happening unreported within their business and the company isn’t even aware of it.

Organisations that approach AML compliance as merely a checkbox exercise and lack the necessary motivation won't be able to successfully identify actual money laundering cases. This might open up opportunities for criminals to target these organisations for the purpose of money laundering, exposing them to harsh penalties and harming their reputation.

Organisations should have buy-in when it comes to AML compliance, with C-level staff pushing for resources to update processes when new AML regulations come in. Implementing executive oversight of all compliance processes will help to successfully drive AML compliance and ensure executive buy-in and intent. 

Misunderstanding of New Regulations

In order to ensure businesses are protected from money laundering and other illegal activities, AML/Combating the Financing of Terrorism (CFT) regulations are frequently updated. Sometimes updates are small, like AMLD6 introducing the need for due diligence for all crypto customers. And sometimes updates are bigger and relate to many industries all around the world, like General Data Protection Regulation (GDPR).

In order to tackle money laundering, AML/CFT regulations are frequently updated to address critical issues but there is a communication gap between the law enforcement agencies and the corporations. Law enforcement agencies need to introduce better communication and guidance for upcoming changes in AML/CFT regulations. AML officers alone cannot implement new rules and regulations, it needs to be a mutual effort between businesses and governing bodies. It’s clear how this can be a major issue faced by AML officers.

Lack of Knowledge around AML

One of the biggest challenges for an AML officer is around educating the company on AML. It is not enough that employees understand what AML is but they must realise the importance of it and why changes to processes are necessary sometimes. Whether you’re talking about a receptionist or a senior executive, they should possess the basic knowledge of AML regulations so they can do their jobs in a compliant fashion. If your staff have not been educated on AML regulations in your industry/country, the business can’t successfully safeguard itself against money laundering activities.

Providing training to all staff is a great starting point but education needs to be an ongoing pursuit for staff to stay on top to compliance. Advocating for continuous training can be a hard sell, especially within businesses with high-growth targets, hence this being a major issue for AML officers.

No job is straightforward. Everyone can point out things that hinder them from doing their best work. Few people though can say that their issues could cost a business both profits and reputation. The four major issues highlighted above are only the tip of the iceberg when it comes to AML officers. But there are easy fixes to most. What’s your biggest issue and how do you overcome it.

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