A report from Thomson Reuters and the Association of Certified Anti-Money Laundering Specialists (ACAMS) notes that since the launch of US AML requirements for financial institutions in May 2018, firms have shifted human capital focus away from regulatory change management towards more efficient customer due diligence (CDD).
According to the 2018 Anti-Money Laundering (AML) Insights Report, the increased certainty provided by the Financial Crimes Enforcement Network’s (FinCEN) new CDD Rule has had a dramatic impact on the human resources strategy of financial firms. Over a quarter (28%) of survey respondents anticipate an increase in staffing for AML compliance purposes, compared to just 8% in 2017. This focus has resulted in a decrease of regulatory enforcement, with just 22% of organisations experiencing regulatory action compared to 31% the previous year.
Chris Maguire, managing director, Corporate Legal at Thomson Reuters, says: “Developing customer risk ratings is a key component of the CDD Rule. The most commonly used factors to develop the risk rating were customer activity, geographic location and political exposure, with politically exposed persons being the top standard measure of risk, as it was in the 2017 report. Organisations have also improved their collection and speed of gathering necessary information.”
The CDD rule may continue to require substantial time and investment, but improving data management and quality, investing in new technology and process automation, and streamlining business processes are key areas of focus. In these areas, the challenges are increased regulatory expectations, properly trained staff and outdated technology.