Money laundering is an enormous problem that’s proving very difficult to solve. The estimated amount of money laundered globally every year is between $800 billion and $2 trillion, according to the United Nations Office on Drugs and Crime. Financial institutions are throwing a lot of resources into AML and they’ve made progress with transaction monitoring systems. Yet 90 to 95 percent of all the alerts they generate are false positives.
The problem is that we’re not looking for a needle in a haystack, we’re looking for a needle in a stack of needles. Money launderers are making significant upfront investments to build innocuous profiles with months, or even years, of legal activity behind them. New transaction types, from online casinos to digital fundraising and charities to prepaid credit cards, are enabling funds to pass into the system in faster, more opaque ways that are challenging the traditional methods, technology and processes of scrutiny. Moreover, inconsistent onboarding and customer awareness enables jurisdictional abuse and leads to inconsistent risk assessment.
Money laundering is increasingly sophisticated and insidious. But we actually have access to all of the information we need to make AML more effective.
About the Author
Simon Moss is Chief Executive Officer for Pneuron Corporation, a business orchestration software provider. He was previously CEO of Avistar and CEO at Mantas, later acquired by Oracle. He served as Partner at Price Waterhouse Coopers, and was co-Founder of the Risk Management Services Practice at IBM. Moss is also on the Board of Directors for C6 Intelligence. Contact him at email@example.com.