How to choose an AML solution for your business: 5 considerations

We get it - there are so many anti-money laundering (AML) solutions on the market that just looking at options gives you choice fatigue.

However, working with financial service providers from all across Europe has taught us one thing: Finding the right AML partner should be your key priority. Your choice will have long-term impacts on your reputation, business resilience, and growth opportunities.

At the same time, it is a complex process, leaving you to wonder:

- What should you look for in an AML compliance solution provider?

- How can you be sure they are doing their job right?

- What is a reasonable cost to pay?

Answering questions like these is imperative for ensuring your peace of mind when it comes to AML compliance.

In this blueprint, we will explain how to choose the perfect AML solution provider for your business to satisfy your compliance needs.

How to find the right AML solution provider: 5 key factors to consider

A set of internal and external factors dictate the process of choosing an AML solution provider.

The former relates to your organization's needs, including your growth plans, internal processes, the regulatory specifics of your niche, and the markets in which you operate. The latter are vendor-specific traits, including reputation, product features, costs, added value, and more.

1. Costs and ROI

Let’s be honest: AML solutions can be expensive. For example, they cost Europe’s largest banks around €14.25 million annually.

Your AML solution shouldn’t be just a cash drain for your enterprise’s resources. Instead, it should create value and maximize ROI. Don’t be shy about holding it to account.

AML vendors’ pricing models come in all shapes and forms. However, when evaluating different solutions, don’t look at the face value alone. Instead, dive deeper to determine whether you can expect hidden costs or gains, quantifiable and unquantifiable indirect benefits, and potential business opportunities. Factors like improved operational efficiency, increased conversions, reduced fraud exposure, faster time to conclusive outcomes, and avoided fines can massively maximize your ROI.

In that sense, diving deeper into the placement of the prospective AML vendors in the overall ecosystem and the value they will deliver beyond the screening itself is crucial.

For example, Fourthline has a cross-border and cross-partner network that allows our experts to remain on top of their game. We can often be among the first to uncover a potential fraudster, report it to authorities, and flag it across our partners' databases. That way, we keep you protected while you focus on your core business needs.

Or let’s take our Case Review Portal - functionality that helps your teams streamline their review process and enhance efficiency. It generates insightful customer due diligence reports that meet auditing requirements. These are widely appreciated by regulators in Europe and beyond as an additional measure to ensure transparency and enhanced compliance.

2. Features and functionalities

What if you run a check on the name of an individual you are onboarding, and there are tens of thousands of matches on sanction or PEP lists?

Without additional reviews, you risk either outright refusing to serve a perfectly eligible client or onboarding a high-risk or sanctioned individual. Now imagine dozens or hundreds of similar cases daily.

This isn’t a hypothetical scenario but one that our business partners have to deal with all the time.

Our experience shows that around 20% of cases with individuals with similar names, especially in Spanish-speaking countries, will generate a potential hit.

Would you want your analysts to spend an entire day every week on such cases?

In that sense, it is imperative to find out from your perspective AML solution provider how much manual work will be required of your team after each screen.

To minimize risks when screening an individual, reduce the number of required investigations, and help increase conversions, you need to look beyond the name and dive deep into your client’s risk profile.

For example, aside from names, our solution analyzes 6 additional data points. Paired with our automated false positive rule-out logic, it eliminates around 75% of the potential hits (as per data from 2022), significantly narrowing down the cases that need extra focus. Moreover, you will get a conclusive outcome - something unique for Fourthline’s AML screening solution.

Why is this important?

The bottom line for every AML solution is to automate the screening process as much as possible, reduce the number of false positives, and ease analysts’ work. While most solutions succeed in the automation part, their inability to provide a definitive outcome puts a significant burden on analysts.

After running a check, most AML solutions will tell you: “There is an X% probability the client you are onboarding is present on a sanctions list.” As a result, your analysts will have to second-guess what this means and how to proceed to avoid the consequences of onboarding a high-risk customer.

In that sense, the value of conclusive outcomes in AML screening can’t be overstated. Aside from mitigating risks and making the screening process significantly more accurate, they also save time by letting analysts focus on fewer cases.As a result, they can cut their operational hassle on high-volume, low-value alerts and go the extra mile in their roles.

You can learn how conclusive results will lower costs, streamline processes, and improve your reputation here.

3. Data quality and reliability

An AML screening solution is as reliable and effective as the data that powers it.

Financial service providers should screen their clients frequently (ideally every 24 hours) and throughout their entire lifecycle, including during onboarding, after client risk profile changes, and after sanction list updates. In an ideal world, AML vendors will use reliable, relevant, and timely-updated data from multiple sources.

However, this isn’t always the case.

Some AML solution providers still scrape the internet to gather data manually. Others rely either on internal databases or on third-party data providers only.

This raises various issues, including error-prone manual data-gathering processes, poor data quality, lack of comprehensive coverage, and the inability to ensure effective real-time monitoring of sanction and PEP lists.

While these processes all take place on the vendor’s side, your organization might be held responsible for potential failures. To avoid this, make sure to partner with an AML solution provider that:

- Ensures ongoing screening throughout the client’s entire lifecycle

- Provides a comprehensive database that combines proprietary and external datasets (preferably from industry-leading providers)

- Guarantees timely updates in case of changes in PEP and sanction lists

- Provides you with an audit trail that you can use to prove to regulators how your organization handles the AML screening process

The last point is especially important. In the event of an investigation, regulators will look at how diligent and careful your approach to money laundering prevention is.

That is why it is critical never to trust an AML vendor blindly. Instead, you should hold them liable - ensure that all actions are a byproduct of sound risk-scoring and request proof.

4. Flexibility and scalability

Every organization is unique, with its own ways of working, growth trajectory, and expansion plans. Your AML solution provider needs to be flexible and adapt to your specific needs rather than the other way around.

- You have an in-house team of analysts - the AML solution should make them comfortable and ease their workload

- You need a helping hand - the vendor should be able to assist your team at every point of the screening process, including running additional checks or investigations, communicating with regulators and auditors, and more

- You want to outsource the entire process - the vendor should be able to offer you end-to-end AML screening to let you concentrate on your core business

- You want to outsource just a part of the process - the best vendors on the market offer a modular approach to AML compliance, allowing you to delegate just a segment of the process

- You want to scale - what if you jump from onboarding 1,000 to 10,000 customers per day? The vendor should help, not restrict, your growth by being flexible to meet your expansion needs

- You want to expand to other markets - the vendor should support you by accounting for jurisdiction-specific regulations and requirements

- You want a plug-and-play solution - the vendor should ensure a seamless onboarding process and not burden you with excessive integration tasks

- You need customization - the AML solution should be able to fit like a glove, regardless of your existing processes or organizational structure

Your AML solution provider thrives when you thrive. Their job is to support you so you can focus on growing your business, not be weighed down by the hassle of compliance.

5. Vendor reputation

Past accolades are an excellent testament to an AML solution provider. However, they are just a part of the picture.

Risk and regulations never sit still. Your solution provider should keep you ahead of the compliance curve. Additionally, a good vendor will be able to demonstrate a strong relationship with the regulators in the regions in which you operate. It is always reassuring when the regulators already know and trust your AML partner.

Furthermore, an open and honest AML solution provider won’t shy away from putting you in contact with their clients who have faced similar challenges. Always ask a vendor to provide tangible evidence of the value they have brought others.

15 questions to ask your prospective AML solution vendors

Considering what’s at stake, choosing an AML solution provider for your organization shouldn’t be subjective. To help you make an informed decision, we compiled a list of 15 questions to ask prospective vendors and find the perfect fit for your needs:

Try Fourthline’s AML screening solution for free

Partnering with an AML solution provider isn’t a one-off transaction but a long-term investment. One way to ensure it is a good one is to ask the vendor the questions above. But it is even better if you can try it for yourself.

We provide you with a free demo of our AML solution. You can upload and screen a list of up to 20,000 individuals to evaluate its performance in the context of your business.