How to outsource AML compliance without outsourcing the risk

Anti-money laundering compliance can cost big businesses huge amounts of money, time and training—and the worst part is that despite this investment, not everyone gets it right. 

Over the past few months we have seen a number of leading Australian brands being investigated over potential money laundering breaches by AUSTRAC, regardless of having spent hundreds of millions of dollars to build internal processes to stay compliant. In some cases these figures can be about $200 million simply to improve their current compliance program. This is alarming.

On top of this, we are seeing fierce competition for workers experienced in fighting financial crime, with many banks leaning on recruitment agencies to find temporary workers to fill these roles. The shortage has meant that these institutions are using labour hire companies, when in an ideal world they would prefer 100 percent permanent staff. Hiring staff is a lengthy, time consuming process, and it can be hard to find the right fit. 

Add to this 12 weeks of training that a new financial crime hire has to undertake to become skilled, and you find an inefficient process to getting your anti-money laundering compliance sorted. This is a time and resource limitation, leading to longer processing times of clients, and in turn some clients slipping through the cracks.

Outsourcing KYC compliance

There are far more efficient and cost effective ways to do AML compliance than for large, leading brands to build it themselves. One way to solve this is taking an already established compliance solution, software or service, and implementing it into your business. This can be done fairly quickly, with an already established company. 

Many people are reluctant to outsourcing compliance programs, citing concerns over risk assessment and analysis. However, outsourcing compliance doesn’t have to mean that you are letting go of the risk analysis. In fact, many tech solutions allow a firm to outsource the heavy lifting and administration of compliance, but keep risk assessment in-house. 

Keep the risk in-house 

Big businesses can task these agencies and software providers with the time consuming aspects of anti-money laundering compliance. Ask them to analyse an entity structure, liaise with end users back and forth for data collection, and complete an analysis of the documents provided. 

An in-house compliance officer can then analyse the outcome of this information and decide on the risk assessment of a client. Essentially you are outsourcing all the nitty gritty, time consuming elements, and all you have to do is approve the case and it’s done. 

Benefit from best-in-class compliance practices

By implementing an already established compliance software solution, you are likely to be closer to meeting compliance requirements. These companies generally have a decision engine made up of feedback from hundreds of customers that use their solution, as well as working closely with government regulators, to understand what best practice truly is. This way you know you’re collecting all the right information, and you can rest assured that during an audit, you’ll have met all your KYC requirements correctly. 

Less procurement due diligence 

Because these types of solutions are solely providing an administrative and analysis service, it also requires far less due diligence from the bank’s end when choosing to implement them. 

Simply outsource the administrative burden of compliance, and keep the risk analysis in-house, removing the need for a lengthy due diligence process with your procurement team. 

We’ve seen a rise in big businesses partnering with software and service companies to outsource niche areas of a business. Partnering with one of these companies could be the new, innovative approach to AML compliance, saving time and money, and reducing money laundering risk.

First AML is an end-to-end AML software solution that is built to help you with your client onboarding and AML checks, so you can focus on doing what you do best. If you’d like to know more how it works, get in touch for a free demo today!

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