AML Framework - a backdoor introduction

I wasn't going to post anything today, until I decided that I wanted to catch the flow of James Taylors EDM blog and his item on Using business rules for Anti-Money Laundering and a previous item he links to: Anti-Money-Laundering (AML) and EDM

The latter one really keys in with the broad set of issues around AML, incorporating New Account Opening, and gives me an opportunity to introduce an AML framework that I have had lying around for a while.

You can see James' post and my, rather lengthy comment on his blog, or just click to expand the section below:

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James,

I know this post has been out there for a while, but maybe someone will click thru from your more recent post: http://edmblog.fairisaac.com/weblog/2006/06/using_business_.html

My view of AML is broader than the one you describe, although you do capture many of the key issues. Here is a link to what I consider to be a fairly complete AML technology framework: http://improving-nao-content.blogspot.com/2006/06/aml-framework-picture.html

Working through this we see how many items are pulled together on top of a technology backbone (in pink) of: EDRMS, BPMS, SOA, Rules, EDM, Analytics, etc.

Working across the blue verticals we see the many processes that make up a complete AML program.

As you state, manual processes are bad, so some form of process automation is absolutely required, and this is a focus for many financial institutions right now, especially around new account opening. Here, process automation ties together the individual tasks and decisions that must be performed. Rules and EDM are an essential part of this new account opening process, both for AML and for other items like suitability assessment.

As we move on to monitoring, which is periodically performed on all current accounts, and used to assess transactions in isolation and combination, it is obvious again the importance of strong rules capability.

Goverment (BSA in the US) reporting is really just a follow on from any red-flags raised in the previous processes, or from monitoring, and should absolutely be coordinated through a workflow to ensure timeliness of response.

Then there is that evil of all compliance: documenting what you do. This should be a lot easier when you have systems in place, and is a lot harder when you do so much process manually.

Finally, the event management requires process automation again, to ensure that you follow defined internal controls for requests and events that inevitably happen.

Why I have I gone through this? Really to validate that the use of rules and decision management is essential for AML as well as other issues. Rather than picking an individual AML component to solve a specific task (e.g. money-laundering risk ranking a new customer), it would be better to combine that with your current capabilities around credit-risk and suitability. Point solutions are rarely able to manage this. And in all cases the underlying technologies of BPMS and EDRMS provide the required control, enforcement and audit for a top-class enterprise compliance program.

For further reading, I have blogged about the combination of technologies required for a well controlled organization, at: http://improving-nao.blogspot.com/2006/06/online-processes-are-more-than-web.html

Expect more AML musings in the near future.

I'm looking forward to providing more insight and opinions over time.

Technorati tags: Financial Services Technology New Account Opening AML EDM Business Rules
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