Welcome to the final instalment of our blog series on the future of fighting financial crime, which is a collaboration between Napier and our partner, RegTech Associates.
Last week we introduced the Napier AML Maturity Model, describing how using this model can help firms achieve a leading approach to AML. We guided you through the first three lenses of the model: Vision and Strategy, People and Culture, and Process.
This blog will focus on the next three lenses.
The Napier AML Maturity Model - the next steps
To recap, the NAMM is a framework for regulated institutions to provide them with insight into their current AML status and plot an achievable route to a holistic and perpetual state for fighting financial crime.
In last week’s blog, we laid out how each stage of this route is viewed through six organisational lenses, namely Vision and Strategy, People & Culture, Process, Data, Analytics, and Infrastructure.
We explained the first three of these lenses - which are themselves each broken down into five dimensions -and the criteria an organisation ought to look at to achieve a leading state of AML.
This week we look at the next three lenses in more detail.
NAMM Lens 4 - the Data used to combat money laundering
At the core of any institution’s AML defensive system is good data. It is critical that the AML system can absorb and process unstructured and structured data and make accurate data available to the troops in real-time.
The NAMM divides this lens into five dimensions, namely Data Quality, Data Modelling, Data Accessibility, Structured External Data, and finally, unstructured External data. The model sets out best practice targets for each dimension, then coaxes each one through the five stages from initial to leading AML.
For instance, the dimension of unstructured external data sets a best practice target of enhanced client screening and monitoring using Artificial Intelligence (AI) to extract relevant data. NAMM shows that at the initial stage, limited use is made of external data sources, usually through manual web searches to determine what action to take. The model coaxes this dimension through the improving, managed and mature stages, culminating in leading AML, where your business can access articles, news, and media to enhance screening and monitoring processes, thus reducing false positives.
NAMM Lens 5 - the Analytics used to fight financial crime
As essential to any business in the sector’s AML solution as data, optimal analytics enable the troops to make pinpoint and rapid interventions as the need arises. Machine learning is vital to the leading AML phase, since it can assist analysts with insights into client behaviours which could otherwise go undetected.
The NAMM splits this lens into the five dimensions of Offline Analysis, Sandbox & Impact Analysis, Machine Learning, Dashboarding, and finally, Reporting. The model lays out best practice targets for each dimension, then steers each one through the five stages from initial to leading AML.
For example, the dimension of Dashboarding proposes a best practice target of enabling AML teams to ‘slice and dice’ data extracted from user-friendly dashboards. This allows analysts to produce real-time, customised reports.
The model then steers this dimension towards the set best practice target from the initial stage, where Dashboarding does not take place, through the improving, managed and mature stages, culminating in leading AML, where your organisation’s AML troops can extract reports from integrated dashboard data. The data can be drilled into as per requirements, customised reports can be extracted, and Key Performance Indicators (KPIs) can be tracked across multiple charts.
NAMM Lens 6 - the Infrastructure which underpins the move to leading AML
Underscoring the implementation of the AML technology by your business is a strong and flexible infrastructure. The ‘architecture’ of your AML framework must be futureproof to remain at the cutting edge of fighting financial crime. The NAMM separates this lens into the five dimensions of User Experience, Search Accessibility, Auditability, Scalability and, finally, Integration. The model then defines best practise targets for each of these dimensions and threads each one through the five stages from initial to leading AML.
In the Integration dimension, the NAMM defines the best practice target as being highly integrated systems that enable data sharing between each system. The model then takes the dimension step-by-step through the five stages needed to achieve this goal. At the initial stage, different processes are undertaken on different systems, using so-called ‘flat files’, or uneconomical manual uploads to achieve integration with limited success. NAMM takes the dimension through the improving, managed and mature stages to leading AML, where Integration is achieved through Application Programming Interface (API) technology, with different repository, modular architecture, based on microservices.
This concludes our exploration of the lenses in the Napier AML maturity model. We have demonstrated how the model identifies your business’ current AML status, then defines the action steps needed to move towards the leading approach. If you would like to view infographics and flow charts of the model in action, you can download it here.
The NAMM and moving towards leading AML
In conclusion, we have shown how the NAMM can steer your business through the stages towards leading AML. It achieves this in four major functional areas, as follows:
- Initiates and implements the AML function proactively, using cutting-edge technology;
- Centres the AML function on the clientele throughout each client’s life cycle using state-of-the-art systems and processes;
- Integrates rules-based solutions with machine learning while still being able to explain and audit actions taken;
- Enables compliance teams to drill down into each transaction and all relevant datapoints related to clients.
These functions give organisations the edge in the fight against financial crime, as well as helping to minimise risk and reputational damage.
Napier, your business, and fighting financial crime
We have seen over the past several weeks how the NAMM approaches achieving leading AML. We discussed the six organisational lenses used to assess each of the five stages of the model and guided you on the journey towards leading AML, explaining how achieving it will enhance your business.
This article is the fourth and final in a series taken from a larger paper authored by RegTech Associates in collaboration with Napier. If you would like to read the full paper, you can download it here.