AML 4 WILL CATCH OUT FIRMS WITH INEFFICIENT DATA DELIVERY, WARNS DELPHIX

From today, the UK is bound by the EU to implement the requirements of the fourth EU Anti Money Laundering (AML) directive. This comes two years after member states were warned of the directive’s deadline on 26th June 2015.

The implementation of the directive further increases the regulatory burden on firms which includes changes to Customer Due Diligence (CDD), a central register for beneficial owners and a focus on risk assessments.

AML departments already struggle to keep up with current regulations, alerts from AML applications and frequent audits from financial regulators. In response to this pressure and the number of substantial fines that have made the headlines in recent years, it’s no surprise that our recent research showed that AML is the number one compliance concern for 60 per cent of financial executives.

One of the biggest challenges for AML compliance is data. Copying and moving ever-increasing amounts of data for regulatory requirements has become riskier and more difficult. Over a third (38 per cent) of financial executives claim high levels of rework hinder their capacity to deliver on data and reporting objectives, with 59 per cent citing data delivery as the biggest challenge to their day-to-day operations. Data that is caught in business silos and refreshed at different times quickly becomes stale and of little use for reporting purposes. This severely impacts data quality and the ability of teams to comply with the growing regulatory burden. Additionally, the time and cost involved in masking data means that banks often copy and move data into testing environments or reporting applications without it being protected, creating a huge compliance risk. Indeed, one in five (20 per cent) claim they are forced to use data that is not fully anonymised. This takes it directly up against yet another regulation – the forthcoming EU General Data Protection Regulations that requires all personal data to be pseuydonimsed.

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In an age where both firms and individuals are being held to account for compliance failure it is imperative that financial institutions get a handle on the data practices, and fast. The 4th AML Directive will only increase demands on business data.

Now is the time to take action to re-architect how data is delivered to those who need it. Modern data delivery platforms can now make clean and accurate data from legacy systems available on-demand for reporting applications, and is paramount to both streamline operations and to demonstrate to regulators that the people, processes and technology needed to effectively manage risk, have been introduced.

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