ATLANTA —In a recent industry analyst report, “Combatting Rising Threats with Aging Infrastructure: Anti-Money Laundering Systems Market Update,” CEB TowerGroup analysts provide a backdrop to its overview of vendor AML capabilities by providing a deep look at current market trends and regulatory imperatives that financial institutions face. In sum, the report puts forward that financial institutions of all sizes have had to dedicate more resources to implementing and managing new regulatory provisions, particularly those focused on anti-money laundering (AML) and Know Your Customer (KYC) regulations.
New regulations have doubled compliance costs for the six largest U.S. banks, rising from $34.7 billion in 2007, to $70.1 billion in 2013. A combination of heightened regulatory scrutiny, increasing bank complexity and geographic spread is putting banks at high risk of being fined for violations to anti-money laundering regulations. In a cautionary round-up of fines and other consequences banks have faced when they were found to be out of compliance, the study goes on to say that the cost of non-compliance is increasing, and financial institutions need to protect themselves from such penalties. Fines can range from millions of dollars for relatively minor offenses like implementing ineffective platforms, to billions of dollars for severe offenses, including willfully subverting existing systems. “Compliance is the leading area of spending for many institutions around the globe. Given the potential cost of making a mistake, banks are placing a premium on choosing a partner that can grow and adapt with them as risk and delivery models change,” said Andy Schmidt, principal executive advisor, CEB TowerGroup.
While many banks are still reliant on time-intensive manual processes, the more progressive banks are adopting new solutions to automate processes that traditionally required expensive labor. One such solution is LexisNexis® Risk Solutions Bridger Insight® XG, an integrated platform for screening services, case management, PEP screening, negative news screening, customer due diligence and enhanced due diligence.
Bridger Insight XG allows users to screen individuals during the onboarding process. By bringing in as many risk relevant data points as possible into a profile, the system helps banks gain insight into their customer base for KYC and due diligence purposes, all under one platform.
Carlos Garcia-Pavia, director of Anti-Money Laundering (AML) Compliance, LexisNexis Risk Solutions, commented that, “As regulations are being fine-tuned, smaller financial institutions must urgently get up to speed on their AML Compliance programs as bad actors who have exited from large financial institutions are going down market seeking their way back into the U.S. financial system. Our Bridger Insight® XG integrated platform automates and standardizes practices that would otherwise rely, not always successfully, on human decisions.”
CEB’s study found that “LexisNexis Risk Solutions provides access to over 4 petabytes of data. This data gives users in-depth information they can use to better understand the inherent risk of their clients, as well as their clients’ networks. The firm’s Customer Data Management (CDM) offering creates additional value by addressing data gaps before entry into bank systems.
About LexisNexis Risk Solutions
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX Group (LSE: REL/NYSE: RELX), a global provider of information and analytics for professional and business customers across industries. For more information, please visit www.risk.lexisnexis.com and www.relx.com.