Anti-Money Laundering Solutions

An Evolutionary Perspective
It is important to understand the history of the AML software category market place.

Law enforcement became concerned with detecting money laundering on a widespread basis during the late 1970’s and early and mid 1980’s as part of the fight against drug trafficking.  However, much of this work was done without the help of software specifically written to detect money laundering, and commercial AML software products were not available during this time.

Artificial Intelligence approaches to pattern recognition and analysis started to emerge in the late 1980’s. During that time, several systems were designed by leading academic researchers in AI to detect insider trading and other forms of abuse on stock exchanges.  Several of these systems were later repurposed to detect money laundering at large banks, including the Royal Bank of Scotland and The Bank of New York.

Other early AI systems that had been developed for predicting behavior in the telecommunications field were repurposed for AML as well.  These early AI systems and other “repurposed solutions” today form one category of AML software.  While these systems were the best that was available at the time, unfortunately, they were not able to incorporate important advances in both software technology and money laundering detection in the last 10-12 years.

The result is that these repurposed systems require a high degree of systems integration and customization, substantial on-going maintenance and big hardware platforms, yet provide little additional AML functionality over their initial versions.

A second category of AML systems are those that are an add-on to core banking systems.  As the major mainframe hardware vendors lost their dominance in providing software solutions for banks in the 1980’s, a number of independent software vendors emerged.  Many of these systems grew by acquisition and are comprised of a number of modules which have not all been designed from the beginning to work together.

As the detection of money laundering and terrorist financing took on increased importance after 9/11, several of these vendors quickly wrote and added AML modules to their offerings.  These modules are characterized by their primary design goal, that is, to “demonstrate compliance” during a bank audit by regulators.

In many cases banks recognize that bank regulators, due to budget and staffing limitations,  may be quite far behind best practices in accurately and efficiently detecting suspicious activity. Solutions in this category currently may lack sophistication in the accurate detection of money laundering patterns and data visualization. Since they are generally not part of a regulator’s audit check list, they are likely not core competencies of the core banking system software vendor; and are often “add on” modules which are not the main focus of the vendor’s product development and business practices.

A third category of vendor that has emerged in the AML space in the past few years is those that attempt to service a portion of the total AML requirement.  These vendors address segments such as the supply of watch lists, watch list checking, AML reporting or AML workflow facilities. These solutions in most cases bear the double burden of having to be integrated into the bank’s core systems and also into other vendors’ products to provide a more comprehensive solution.  These “patchwork” solutions are difficult to maintain and can be difficult or even impossible to adapt to the bank’s changing requirements.

Very few AML systems have been designed and built from the ground up in the last decade.

The Haydrian XM3 Platform was designed from scratch within the last 24 months after a carefully considering of the existing AML products, consulting a number of banks and assembling a group of banking experts in the AML field.

Risk Management Solutions for AML
XM3 represent the next generation of compliance products featuring ease of use, flexibility and advanced technology. While solutions are tailored to each bank's requirements, analytic scenarios are based on proven Money Laundering and Fraud detection methodologies. All executed transactions and customer data are assessed using advanced and flexible analytics. When unusual activity is detected, all related information is dynamically sent to the institution. Protection of an institution and compliance requirements are easy to obtain with XM3.

XM3 has been designed with the regional banker in mind. Powered by proven surveillance technology and adapted for every client, Haydrian has narrowed its focus to finely tailored compliance tools affordable for regional banks and financial institutions. Our advanced and flexible analytics are derived from industry experience and reviewed by former regulators and compliance officers at multinational banks. With these analytics, XM3 enables identification of potential threats, risk mitigation, and support regulatory compliance standards worldwide.