This article was originally published in:
RSL & Services Clubs Association FOCUS Magazine August - October 2022 | Edition #11
The RSL & Services Clubs Association magazine “Focus” is a publication to inform member clubs on issues where they need to prepare, consider, act and/or respond where appropriate. In each issue there will be informative, interesting, thought-provoking articles to encourage clubs to be pro-active in addressing current and future challenges for the gaming industry.
Money laundering is under the microscope now more than ever. Large amounts of cash transactions can be prone to corruption and fraud.
The NSW Crimes Commission Inquiry into Money Laundering report will be out soon, and hopefully we will see a distinction between clubs and other types of venues – given the very nature of our business.
Media messaging aside, we need to be on high alert, both from a compliance point of view, but more importantly because it’s the right thing to do. We provide safe venues for our communities, and this goes hand in hand with that approach. Signing into clubs and our broader commitment to AML/CTF programs fosters a level of assurance that we are on the front foot.
Regulatory developments and the general fraud landscape in the pandemic, has led the gaming industry to prioritise and invest in AML compliance, creating risk-based compliance programs that guard against potential money laundering.
Effective anti-money laundering programs aren’t always easy to build and maintain. They are also expensive, (the financial industry for example spends about $11 billion every year on AML compliance).
If your organisation is struggling to meet compliance standards, you might be tempted to cut corners by automating processes instead of hiring an auditor or a team of analysts. After all, automation eliminates the need for repetitive tasks and frees up employees for more important work. The cost savings from automation could pay for an audit or analyst in just a few months. In this article, we’ll explain why so many companies shy away from automating their AML programs and why they shouldn’t.
Automation does not remove the need for human assessment and judgment, particularly when investigating, but by outsourcing data and rules-making to computers, automation streamlines processes, lowers risks, and avoids the need for extra fees to humans performing repetitive tasks computers can perform better. An AML data-driven program leveraging RPA (robotic process automation) sets the stage for a successful risk-based approach to AML risk determination, satisfying regulatory compliance concerns while adding maximum value to the process.
Why is automating AML compliance so difficult?
AML is a very complicated process that involves many different parties and multiple roles. The people who are best suited to do each task are experts in the field, not software engineers. It’s difficult for IT teams to build automated systems that not only fit into the existing workflow but also integrate with the many systems in use today.
Why isn’t automation more widely used for AML?
It’s understandable that organisations hesitate to automate key parts of their AML program. But at the same time, they have been doing the same thing the old way for many years... If they have been successful without automation, why switch now? There are a few reasons why organisations choose not to automate their AML programs. In some cases, it may be a lack of resources. If your organisation is already overworked and understaffed, adding new processes can seem like an insurmountable obstacle. Other companies may not have considered automation as an option, since it seems like such a futuristic solution. It’s important to remember that the Internet and the computers that power it have been around for decades. Organisations that don’t want to automate their AML processes may be sticking to outdated ideas about how technology can be used – consider what efficiencies you can gain by streamlining this process.
How does automation benefit an AML program?
Automating certain AML processes can save companies time and money. For example, if you have a large number of transactions of significant value, you may be required to file a suspicious matter report. This is a time-consuming process that involves filling out an online form, printing it out, and mailing it. Automating this process can save you hours of work. You can integrate your compliance software with your bank account, so you can file SMRs electronically. This reduces the amount of time it takes to file the report, as well as the amount of effort needed to print and mail the forms. Although time savings are important, organisations can also save money by automating certain AML processes. Automated systems can be more accurate than humans since they don’t make mistakes or show bias. And, since they don’t require paychecks, you don’t have to factor in the cost of hiring employees.
What are some ways to automate the detection of money laundering?
Let’s say you want to identify large cash transactions. You can build a rule that flags any transactions that are larger than $10,000. But how you write that rule will heavily impact who gets flagged. Automated systems can flag the transaction and then let a human employee review the information before deciding whether the transaction is suspicious. This gives employees the ability to make their own judgement calls, but it doesn’t require them to manually go through every transaction. Automated systems can also be helpful when it comes to reviewing account history. If someone has a long history of large transactions, you may want to investigate further.
Summary
In this article, we explored how automation can benefit anti-money laundering (AML) compliance programs. AML is a complicated process that requires many different parties to work together. It can be difficult for IT teams to build automated systems that not only fit into the existing workflow but also integrate with the many web-based systems in use today. Automating certain AML processes can save organisations time and money.
Learn more about RPA and explore the benefits with us in further depth by reaching out to our team.
