5 benefits banks can gain from Fourthline's AML solution

“The EU's hands-off approach towards dirty money has only yielded scandals. The time has come for a crackdown.”

This isn’t a quote from an op-ed criticizing the EU’s efforts to tackle financial crime. It is from a March 2023 press release by the European Parliament itself. 

Around 90% of the biggest European banks have been penalized for some sort of money laundering offenses between 2008 and 2018. The record fines imposed on several European Tier 1 banks for shortcomings in their AML measures remain fresh in the minds of European compliance officers.

Yet, as the statement above shows, the EU considers its efforts insufficient and is looking to strengthen controls further. Even Switzerland, with its reputation as the leading tax haven for offshore banking activities, is now adopting sweeping measures to clamp down on money laundering.

As a result, banks will have more compliance boxes to check. 

Automated anti-money laundering (AML) solutions are proving invaluable for building compliant flows, ensuring that you will be timely notified if you are serving a high-risk client. However, they don’t have to serve only as a warning system. Just the opposite - AML solutions should go beyond traditional screening to unlock added value for your organization. 

The 5 benefits banks can expect from Fourthline’s AML screening solution

Fourthline built an AML screening solution that helps banks strike the right balance between satisfied customers and satisfied regulators. Aside from compliance excellence, they unlock various quantifiable and unquantifiable benefits, including:

1. Improved operational efficiency

In an empirical study analyzing the resources that financial institutions set aside for AML compliance and the effectiveness of the allocation process, the Bank Policy Institute examined 16 million alerts. Of the identified 640,000 suspicious activity reports and over 5.2 million currency transaction reports, just 4% and 0.44%, respectively, warranted follow-up inquiries from law enforcement. 

This highlights the need for adopting AML solutions capable of reducing your analysts’ workload by filtering out false positives. Without such, your team will be burdened with low-risk cases while also being more likely to miss the potentially high-risk ones.

On the other hand, some banks might act out of excessive caution and directly opt for closing client accounts, as recent experience has shown. While being cautious is crucial, it shouldn’t come at the expense of your clients’ satisfaction. 

This isn’t just wishful thinking but a call from regulators around Europe. The FCA, for example, is now urging banks to enhance their due diligence for potential PEPs and sanctioned individuals. However, the regulator also demands that this doesn’t result in unnecessary barriers for clients.

That is why it is imperative to strike the right balance between adhering to regulatory demands, easing the compliance procedures for your team, and providing a seamless, user-friendly experience for your customers.

Organizations adopting our solution report significantly improved team productivity due to the elimination of guesswork. By ruling out up to 75% of the potential hits and providing a conclusive outcome, it significantly reduces the number of false positives and streamlines your analysts’ work so that they can focus on the cases deserving special attention.

2. Safer banking through technology and human excellence

A study by the University of Cambridge and the University of Texas at Austin found that criminals, terrorists, tax evaders, and sanctioned individuals can easily sidestep banks’ defenses. The number-one reason is the failure to distinguish between low and extremely high-risk individuals.

Fourthline’s leadership team comes from a banking background. This gives us an insider view into the industry’s compliance needs and pain points and fuels our determination to address them.

Today, Fourthline is on the frontline of the global fight against financial crime. Partnering with us means you are too.

Our approach capitalizes on the power of automation and the excellence of human expertise.

On one side, we have experienced in-house financial crime teams in Amsterdam and Barcelona that receive ongoing training and work around the clock to identify new fraud patterns. Our experts will continually share their knowledge with your specialists so everyone becomes better equipped in the fight against financial crime.

In addition to the human touch comes our automated AML screening solution, tested on millions of users. It is renowned for advanced features like:

• Conclusive outcomes (unique to Fourthline) - our AML screening solution always delivers a definitive result. This increases fraud detection accuracy to ensure you aren’t serving individuals with unacceptable levels of risk.

• Proprietary rule-out logic - our solution eliminates up to 75% of potential hits, significantly reducing the number of false positives and streamlining your analysts’ work.

• Screening internal and external databases - Fourthline performs a single or daily real-time watchlist screening through our proprietary Fraud Database and external resources. Among them are country-specific databases, sanctions lists, and PEP watchlists from LexisNexis and Refinitiv to ensure you know who your clients are. 

• Additional checks and investigations - Fourthline’s analysts can assist your team with an open-source intelligence (OSINT) investigation on custom watchlists and perform comprehensive adverse media screening to uncover hidden red flags. 

3. Reduced compliance costs

“The banking industry spends millions annually for employee training programs on laundering” - an excerpt from a New York Times article from October 21, 1989. 

Over three decades later, the situation is strikingly similar, with the main difference being that banks are spending even more on compliance. 

Between 2010 and 2015, the NatWest Group, for example, spent over £700 million on financial crime prevention. It has announced it will invest another £1 billion by 2027. The bank employs over 5,000 financial crime professionals. 

Yet, it has also paid out £279 million in three fines for financial crime control failures since 2010. This isn’t an isolated problem. Deutsche Bank has gone a similar route but on a bigger scale.

LexisNexis finds that European institutions bear the highest compliance costs and the highest cost increase by far. According to some studies, they are 39.8% higher than in US/Canada. Around 98% of institutions report increased financial crime compliance costs, with the most significant component being labor. 

In the era of ever-tightening regulations and increasing fines, you need an AML partner that can keep your compliance costs under control. Our solution helps you design more efficient and flexible compliance flows based on:

• Conclusive outcomes minimizing operational efforts on your side. Often, you don’t need additional investigations, which means no extra costs

• A plug-and-play solution with minimal implementation costs

• Minimal team training and onboarding 

• A sophisticated Case Review and Auditing Portal with a user-friendly interface that streamlines the review process and allows agents to quickly assess screening results and conduct in-depth investigations

• Flexibility to choose to either take complete control of the process in-house or delegate the screening to us

4. Compliance in Europe and beyond

Cross-border regulatory cooperation is growing stronger, presenting banks with new challenges.  

European banks looking to expand their business to other markets need a partner that won’t only help them build compliant flows but also support their business growth. 

At Fourthline, we believe the future of fighting financial crime is in tri-party collaboration between technology providers, banks, and regulators. 

We are in continuous contact with European financial regulators and actively incorporate their feedback into our product stack to ensure you remain ahead in financial crime prevention. Our Client Due Diligence reporting and audit trails, for example, meet the requirements of regulators across Europe and beyond. That way, we can help you build region-specific compliant flows based on the latest regulatory requirements. 

We are also actively collaborating with a diverse group of law enforcement authorities like Europol or the French police to crack down on money laundering in Europe. This allows us to keep on top of the latest developments and provide you with valuable knowledge for financial crime prevention.

5. Easy integration with your existing technology - one API for all your needs

Tier 1 banks bear the biggest responsibilities. A popular approach for meeting them is establishing a diverse mix of compliant solutions and complex processes. Those usually combine in-house teams and a multitude of external AML and KYC vendors. That way, different parties are responsible for handling different segments of the solution, eliminating the risk of having a single point of failure.

However, this strategy has several flaws.

First, the fragmentation increases compliance costs since you are paying multiple vendors and managing multiple integrations. Second, it builds a flow where multiple vendors, incomplete by themselves, have to interact with each other. As a result, it burdens banks with complicated vendor management and software integration tasks.

Our modular approach to AML grants you the flexibility to only integrate the solutions you need. A single, highly customizable API gives you many possible configurations. That way, we can tailor the compliance flows around your business needs, growth stage, and market expansion goals.

From enhanced bank-grade KYC to single modules for AML screening or document renewal - you can choose whether to delegate all or just a part of your processes to us. This allows you to remain in complete control of your compliance flow without the burden of complex integrations or managing multiple vendors.

On top of that, our dedicated integration specialists can evaluate your tech stack and suggest the easiest way to integrate our solution. The API meets the industry-level security standards while its integration allows a seamless sync with your existing AML systems.

See how our AML screening solution fares against yours for free

Banks have a front-row seat in watching the EU’s cash flow and must alert regulators in case of irregular activity. If they fail and authorities discover problematic operations later, banks and their compliance employees are on the hook for various penalties including fines, closure, loss of banking license, criminal punishment and imprisonment, and more.

You need a reliable solution, and you need it now since regulators’ audits are retrospective. With all that in mind, do you wonder how efficient your current AML screening system is?

With Fourthline, you get 20,000 individual screenings for free to see how our solution performs compared to your existing set-up.