The first blog of this
three-part series highlighted how converging Fraud and Anti-Money Laundering (FRAML) efforts can unlock
powerful, collective outcomes for banks and financial services firms. This blog explores how a unified
technology platform can strengthen this FRAML approach.
Estimates suggest that 2-5 percent of global GDP is laundered annually, while
global losses due to fraud totaled USD 485 Billion in 2023. These crimes often follow similar
patterns of exploitation, impacting financial institutions, their customers and society at large.
The silver lining is that technological advancements and cutting-edge data analytics have significantly enhanced
detection capabilities. However, banks and financial institutions now require a more
integrated approach to combat fraud and money laundering while controlling costs. Given
the overlap in detection methods, implementing a unified approach, FRAML, offers a potent solution.
Integrated Platform, Multiple Advantages
A FRAML platform integrates data elements, transactions and field attributes into a single feed, enhancing the
ability to detect both types of criminal activities. Regulators are increasingly supportive of this
collaborative approach, which brings several key benefits:
1. Comprehensive Data Analysis
One of the most important advantages of a unified platform is how it enables seamless data sharing and
analysis of transaction data and customer behavior. This creates a more comprehensive view, something
that’s often challenging when functions (AML and fraud) operate in silos.
2. Holistic Risk Evaluation
Institutions can better evaluate a customer’s overall risk by collectively assessing fraud and
money laundering risks. Identifying links between fraud and money laundering that might be missed when
viewed in isolation uncovers hidden vulnerabilities. This proactive approach can help identify red flags
during onboarding and ongoing monitoring and protect customers and the financial institution from
regulatory penalties.
3. Streamlined Operations
A unified platform streamlines processes by eliminating duplicate work, allowing for more thorough
investigations and faster system enhancements. Any changes or new features can be rolled out more
efficiently and cost-effectively.
4. Advanced Technology Integration
Integrating advanced technologies like Artificial Intelligence (AI), Generative AI and Machine Learning (ML) is faster and more effective on a
unified platform, enhancing fraud and AML functions. This leads to quicker, more accurate detection of
underlying risks and more efficient decision-making.
5. Reduced False Positives
Traditional fraud and AML systems generate high volumes of false positives, leading to inefficiencies.
With a unified platform, institutions can minimize duplication of alert generation and refine rules to
produce more accurate alerts.
6. Enhanced Reporting
A unified system enables financial institutions to deliver comprehensive reports, strengthening
regulatory compliance. These reports offer in-depth, data-led insights that benefit the institution and
regulators, with faster response times to new requirements.
Best Practices for Crafting a Robust Solution
While a unified FRAML approach offers significant cost savings and efficiency improvements, integrating fraud detection and AML functions brings various challenges – from data
integration and change management to regulatory compliance.
To address these challenges and build a robust technology platform capable of effectively managing risks in a
complex environment, financial institutions must develop a best practice-driven strategy. This involves:
- Assessing their current technology landscape and data complexity
- Establishing a plan to build the necessary common data framework for FRAML
- Collaborating with the right technology and domain partner to tap into their proven expertise, accelerating
adoption and outcomes
Dive into the final blog in this series to learn how leveraging FRAML in financial crime with a Center of Excellence can unite people, processes, and technology for superior outcomes.