Anti-fraud and anti-money laundering (AML) have long co-existed as separate but related entities in financial institutions. Fraud investigations are more real-time focused, with the aim of stopping a financial loss event in progress, while AML is targeted on postmortem analysis to identify the systematic activities of making so-called dirty money clean.
But, recently, there has been a trend, supported by regulators, toward combining the two functions under an enterprise-wide anti-financial-crime umbrella. The evidence is clear that the time has come for consolidation.
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Our experience shows that using integrated anti-fraud and AML resources in a more efficient and less siloed way can drive cost optimization by 30% or more.
This is because of the many similarities and connections between the two functions, including the fact that much of the data required to detect money laundering is the same as what's needed to prevent fraud. Knowing your customer procedures and documentation of expected activity for clients can also serve as important fraud tools.
Both teams use similar tools and investigative protocols for resolving cases, including red flag/alert scenarios across one entity for both anti-fraud and AML. For example, flags/alerts pop up when there's a burst in credit-card activity, a high-risk industry or jurisdiction involved, an unusual use of a card, or abnormal cash activity.