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Uniform Regulations and High End Talent Are Key to Successful AML Operations Reveals PwC

PwC, the assurance, tax and advisory services provider, has published a new report revealing what factors impact effective anti-money laundering (AML) practices the most. 

In its report, titled  EMEA AML Survey 2024: Spotlight on EffectivenessPwC reveals that many organisations do not feel they have adequate AML operations. In fact, many do not think they are addressing the practicalities of modern AML operations as a result of current and upcoming AML regulations.

One-fifth of respondents claimed that a lack of uniformity and application across jurisdictions and industries resulted in ambiguity when it came to entering relationships and transactions. Within the EU, such concerns will likely be alleviated moving forward as the new AML Package gets rolled out in the coming years.

Finding the right staff to ensure the right practices in line with regulations are being implemented effectively was also a problem highlighted within the report for 35 per cent of respondents. With operational costs rising by 14 per cent in the past two years, affording the right talent with knowledge on the needed tech has become even more of a challenge than it previously was.

Without a stable and strong foundation to build on, implementing novel digital tools – AI and otherwise – in AML teams would not bring about the desired improvements in effectiveness and efficiency.

Understanding how firms are responding
Imran Farooqi, EMEA anti-financial crime leader at PwC
Imran Farooqi, EMEA anti-financial crime leader at PwC

Imran Farooqi, EMEA anti-financial crime leader at PwC United Kingdom and co-chairman of the editorial board said: “AML frameworks, policies and actions will be a cornerstone of any financial centre that wishes to be seen as a trusted financial hub. Regulatory frameworks have matured considerably over the last decade, however criminals have also been shown to adapt quickly.

“This landmark PwC survey provides invaluable insights into how firms have responded to recent regulatory and technological shifts. While the financial sector is demonstrably rising to the occasion and taking AML seriously, our research also captures the significant challenges firms still face. By understanding these challenges, policymakers and industry can better work together to build a more robust and future-proof AML ecosystem.”

Speaking at the launch of the report, Marilin Pikaro, director of the innovation, conduct and consumers department at the European Banking Authority (EBA) said: “Sound AML/CFT governance arrangements, appropriate risk assessment practices, awareness of staff members and timely reporting processes are key to prevent and fight money laundering and terrorist financing (ML/TF).

“The European Banking Authority’s role as defined by its legal mandate is to lead, coordinate and monitor the EU financial sector’s fight against ML/TF across the EU.”

Now is the time change

Sixty-three per cent of respondents are fully confident that their transaction monitoring approach is fit for purpose, although 55 per cent say that the maturity of their systems are an impediment to implementing new technologies.

The main driver behind AML investments is to increase the effectiveness of compliance controls, cited by 36 per cent of respondents, with transaction monitoring being the top AML topic to prioritise.

Looking at regional trends

With regards to digital tools, over half of respondents (55 per cent) expect to spend more than 10 per cent of their AML budget on them, with emerging markets in the Middle East (96 per cent) and Africa (86 per cent) being the most likely to do so than established financial centres. Thirteen per cent of respondents in the Benelux have no plans to invest in digital tools at all, the highest among all regions under study.

While all regions are considering implementing AI solutions to their AML operations, financial institutions in the Middle East (93 per cent), Africa (93 per cent), and the Nordics (94 per cent) are the most enthusiastic. Transaction monitoring (79 per cent) and screening (59 per cent) are the main AML functions respondents are planning to use AI for.

Michael Weis, anti-financial crime leader at PwC Luxembourg and co-chairman of the editorial board
Michael Weis, anti-financial crime leader at PwC Luxembourg and co-chairman of the editorial board

Michael Weis, anti-financial crime leader at PwC Luxembourg and co-chairman of the editorial board said: “Within the EU financial sector, there’s a mixed sentiment towards regulatory clarity and effectiveness. While just over half of firms see current regulations as clear enough, much scepticism remains about the practicalities of implementation.

“Despite this, we welcome today the European Parliament’s vote on the EU’s AML package which will address those concerns by helping to create a more harmonised regulatory environment across borders and industries and address some of the operational challenges faced by firms.”

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