AML Compliance: Strengthen Protection, Stop Criminals

December 11, 2023
AML compliance process

Money laundering is a serious issue that plagues and poses practical problems for financial institutions around the world and where AML compliance programs play a critical role. 

Criminals launder trillions of dollars every year through a variety of illicit means. To combat this problem, many countries have introduced anti-money laundering (AML) regulations. These require financial institutions to implement robust AML compliance programmes.

A key component of these programs is the AML investigation process. It is critical to the detection and prevention of money laundering activities.

In this blog we will explore the main sources of money laundering. We will also explain the role of AML investigations. And discuss why they are essential to a stronger compliance programme.

Statistics around AML compliance

The nature of money laundering makes it difficult to estimate the exact total amount of money that goes through the laundering cycle.

According to a report by the United Nations Office on Drugs and Crime, a preliminary estimate of the amount of money laundered worldwide in a year is 2 to 5% of global GDP, or $800 billion to $2 trillion in US dollars.

Much of this money, between $200 billion and $500 billion, is generated by drug-related activities and circulates through various channels in search of good “laundromats”.

The engines of crime. Source: Europol
The engines of crime. Source: Europol

As a result, money laundering is sometimes described as the third largest business in the world, after health care and pension funds.

Other popular sources for laundering include financial fraud, tax evasion, human trafficking, and corruption.

The scale of the problem highlights the need for robust AML programmes to prevent criminal activity and protect the reputation of financial institutions.

The importance of AML investigation

AML investigation comes as a critical component of any strong anti money laundering compliance program. It involves the identification and investigation of suspicious transactions that may be related to money laundering or other illicit activities.

The AML investigation process helps financial institutions detect and prevent money laundering activities by reviewing transactions, identifying patterns, and conducting research to determine whether there is evidence of criminal activity.

The investigation process typically involves gathering information from a variety of sources, including transaction records, customer profiles and other relevant data.

Without an effective AML investigation process, financial institutions may fail to detect and prevent money laundering activities, which can have serious consequences, including fines, legal action, and reputational damage.

A robust AML investigation process can help financial institutions meet regulatory requirements and prevent financial crime.

AML investigation process

The AML investigation process is a complex and time-consuming task that requires a combination of technology and human expertise.

The process typically involves the following steps:

Financial institutions use sophisticated software to monitor transactions for suspicious activity. The software is designed to identify patterns and anomalies that may indicate money laundering or other criminal activity.

  • Alert Generation

When the transaction monitoring software identifies suspicious activity, it generates an alert that is sent to the AML investigation team for review.

  • Investigation

AML investigators review the alert and conduct research to determine if there is evidence of criminal activity. This may involve reviewing transaction records, customer profiles and other relevant data.

  • Documentation

AML investigators must document their findings and clearly explain why they deemed a transaction suspicious.

  • Reporting

If the investigation reveals that a transaction is linked to criminal activity, the financial institution must file a Suspicious Activity Report (SAR) with the relevant authorities (f.e. Financial Intelligence Units, FIUs).

Challenges in the AML compliance process

The AML investigation process is not without its challenges. One of the most significant challenges is the sheer volume of transactions that financial institutions process on a daily basis.

The sheer volume of data can make it difficult for investigators to accurately identify suspicious transactions.

Another challenge is the increasing sophistication of money laundering techniques. Criminals are constantly developing new techniques to evade detection, making it difficult for financial institutions to keep up with the changing landscape.

Also, AML regulations frequently change, and staying current with these updates can be difficult. Different countries and regions have varying AML regulations, complicating compliance for multinational organizations.

Addressing these challenges requires a comprehensive approach that includes staying updated on regulatory changes, investing in advanced technology, improving data management practices, and ensuring that personnel are adequately trained and resourced.

Critical role of the ML investigator

Money laundering investigators play a critical role in the AML investigation process. They are responsible for identifying suspicious activity, conducting research, and documenting their findings.

Money laundering investigators must have a strong understanding of AML regulations and criminal investigation. This includes an understanding of predicate offences, as well as expertise in financial analysis and data research.

ML investigators work closely with law enforcement agencies and regulatory bodies. They provide critical information, share investigative findings, and support legal proceedings. Their collaboration is essential for effective law enforcement action against money launderers.

To become an AML investigator, you must have a bachelor’s degree in accounting, finance, law or a related field. In addition, certification programs such as the Certified Anti-Money Laundering Specialist (CAMS) can provide valuable training and credentials.

Keep in mind that ML investigators use software for transaction monitoring, data analysis, and pattern recognition. Because the goal is to detect complex money laundering schemes. Staying updated with technological advancements enhances their investigative capabilities.

Key conclusions on AML compliance

To sum up, money laundering is a global issue that requires financial institutions to implement robust anti money laundering compliance programs.

A key component of AML compliance programs is the AML investigation process. It is critical to the detection and prevention of money laundering activities.

The AML investigation process involves identifying and investigating suspicious transactions, documenting findings, and reporting to the appropriate authorities.

The AML investigation process is not without its challenges. It is essential for financial institutions to implement a strong and effective AML program. Because the goal is to comply with regulatory requirements and prevent financial crime.

By mastering AML investigations, financial institutions can help ensure that criminals do not get away with their illegal activities. And that our financial systems remain safe and stable.

About the author

AMLYZE is a fully automated service created for the financial sector and businesses that are obliged to comply with AML/CFT regulations.


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