Prevent financial crime with real-time compliance monitoring

These alarming trends have left corporations calling out for purposeful real-time monitoring solutions. Underpinned by regulatory and operational expertise, these platforms (including Global Relay’s communications monitoring) exist to close the gaps of compliance and bring risk to a more palatable level.

The stringent AML and KYC regulatory landscape

The current landscape for companies navigating anti-money laundering (AML) and Know Your Customer (KYC) requirements is challenging.

Without dedicated KYC compliance solutions, many compliance teams are juggling the likes of AMLD5, FATF, and FINRA’s AML rules manually. But these each have their own requirements, creating data silos, repetitive entries, and the unnecessary wasting of resources.

Example: FINRA’s AML rules

The proactive monitoring requirements of FINRA’s AML rules (including FINRA 2090) mean that firms must establish their own compliance programs that are reasonably designed to detect and report suspicious transactions.

Firms have a bit of leeway when designing these systems, including:

• How they collect, record, and monitor customer due diligence
• How they independently test and validate which transactions are suspicious
• How they train staff to identify and investigate suspicious transactions

But in 2023, financial firm Merrill Lynch was fined $6 million for failures with regards to these rules. FINRA’s notice stated,

“Merrill Lynch failed to apply the correct threshold to report suspicious activities for more than 10 years and, as a result, failed to file nearly 1,500 Suspicious Activity Reports (SARs)”.

Clearly there is no room for error when it comes to AML compliance solutions and the KYC regulatory landscape. 

Consequences of failing to prioritise compliance

Generally, non-compliance failings tend to surface as a result of a financial crime; the likes of a data breach, hack or accidental payment to fraudsters.

However, investigations and reports by the regulators as a result of these events can lead to enforcement actions. Here, companies receive hefty fines and sometimes even individual penalties such as job losses or being struck off the qualifications register, leading to further regulatory scrutiny.

But those that have experienced this may argue that the next step is worse – the reputational damage that comes with financial crime compliance failings:

• Impacting customer and supplier relationships
• Cause the cancellation of contracts
• See investors pull out as it destroys public trust in the business

Detecting financial crime tactics

While the significant evolution of technology has led to complete innovation in businesses across industries, it’s also compounded the problem. And that’s the threat of fraudsters exploiting the same technologies and tactics to cause harm.

In fact, without updating detection methods, your teams won’t even know what to look for. For example:

• Cryptocurrencies: criminals are completely anonymous on crypto platforms, and once fiat has been turned into crypto, it is far harder to trace
• Encrypted apps: fraudsters can use encrypted apps to disguise or hide their presence in your systems, and create challenges for an investigations team in detecting which data was accessed
• AI: cybercriminals are using sophisticated AI platforms to realistically impersonate genuine team members and develop hyper-personalised phishing attacks that can manipulate insiders

Undetected fraud can lead to more substantial and ongoing financial losses, continuous data breaches, and delayed investigations, which ultimately exist to piece together how the fraud occurred, and figure out future financial crime prevention.

Firms should therefore ensure that any strategy for financial crime prevention also includes real-time detection and monitoring. It’s something that TD Bank struggled with in 2024, when they were found to have failed to detect transactions that were later proven to finance criminal activity.

Balancing compliance with operational efficiency

Typical compliance processes, such as data validation, WORM, and changelog reporting can be both manual and intensive, causing companies to suffer from operational inefficiencies in order to meet their regulatory obligations. 

This can be further exacerbated by siloed systems, causing departments to miss or duplicate the data that could lead to faster detection of financial crime. Without all departments on the same page, the risk is that businesses can waste their resources and miss compliance deadlines.

Transaction reporting strains

One example trending across the industry right now is that firms are struggling to accurately review and categorise transactions from an AML perspective. A research paper detected more than 6 million reporting errors, with 97% of UK regulatory reports containing at least a portion of inaccuracies.

But it’s important to note that balancing compliance and efficiency is possible, especially when investing in the right technology. By working with third parties that integrate directly into the systems and processes that you’re already using, you can effectively collaborate between teams to ensure that everyone is on the same page.

For example, Global Relay’s Communications Surveillance captures comms from every employee’s devices, from emails to WhatsApps and beyond. Generative AI then constantly reviews messages in their entirety, making alert decisions based on semantics and context. We significantly reduce the risk of false positives (and wasted internal resources) by separating the true threats from the noise, empowering your analysis to prioritize meaningful investigations.

Getting on the right track to for financial crime compliance

A good anti-fraud strategy focuses on detection, prevention and response. With rapid detection comes a limit on the fallout of cybercrimes, and bulletproof prevention brings confidence in company security and the regulatory compliance process.

Real-time monitoring is the bare minimum for getting on the right track. As firms begin to realise the value of real-time monitoring, they’ll also benefit from:

• AI-driven monitoring – for efficiency without risk compromise
• Automatic alerts – aiding the earliest possible detection of suspicious activity
• Unified cross-channel data analysis – connect your teams by sharing the data and promote a transparent environment

And it’s all possible with Global Relay. With integrated compliance to AML and KYC, you won’t need to create yet another process for the regulators, either.

We know that financial crime can be daunting, but our real-time communications surveillance builds a proactive defence before it’s needed.

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