Welcome to part three of our blog series on the future of fighting financial crime, which is a collaboration between Napier and our partner, RegTech Associates. In last week’s blog, we examined how AML practitioners perceive their organisations’ status in the fight against financial crime. We highlighted the challenges faced in the sector when implementing a financial maturity model and introduced the Napier AML Maturity Model, or NAMM.
This week and next, we shall explore in detail the NAMM’s stages, organisational lenses and dimensions and show how the model can be harnessed for your business.
Combatting financial crime with the Napier AML Maturity Model
To recap, the NAMM can be summarised as being a framework “designed to give regulated firms an understanding of the status of their AML and capabilities and the ability to continuously improve on the current state to achieve a more holistic and optimised state for combating financial crime.”
Last week’s blog explained how the transition from a siloed to a customer-centric view is achieved over five stages. We then laid out how each stage is viewed through six organisational lenses, namely Vision and Strategy, People & Culture, Process, Data, Analytics, and Infrastructure. It is these lenses which we will explore this week and next.
NAMM Lens 1- the vision and strategy for fighting financial crime
Any organisation needs to establish the goals it wants to achieve, which will inform the AML strategy and subsequent tactics it evolves to accomplish these aims.
The NAMM divides this lens into five dimensions, namely Vision, Strategic Planning, Governance, Performance Management, and Performance Tracking. 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 Performance Tracking sets a best practice target of tracking performance for continuous improvement. NAMM shows that at the initial stage, performance is not tracked at all. The model guides this dimension through the improving, managed and mature stages, culminating in Leading AML, where performance metrics are automatically tracked with detailed dashboards and the ability to drill down to specific areas.
NAMM Lens 2- the people and culture of the AML battlefield
All organisations are made up of people. How the transition to AML maturity will affect them and the culture they create in the company is paramount. This is vital in response to the increasing integration of Artificial Intelligence (AI) into AML technologies, since organisations need to be aware that data scientists with the skill set required during AI’s learning phase are hard to come by.
The NAMM divides this lens into the five dimensions of Culture and Leadership, Functions and Organisation, Team, Roles, and Knowledge Sharing. The model sets 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 Knowledge Sharing sets a best practice target of holistic KYC, transaction monitoring and AML. The model then steers this dimension towards that best practice target from the initial stage, where little sharing takes place and communication is centred on emails, through the improving, managed and mature stages to leading AML. At the final stage, knowledge and best practice is shared, and periodic events are hosted to share findings and achievements.
NAMM Lens 3- The process of customer centric AML
Progressing to leading AML means creating and maintaining operational excellence. Underscoring this is the automation of routine, repetitive tasks using dynamic rule sets, which reduce false red alerts. This automated process frees up time for analysts to spend on improving and expanding your business.
The NAMM divides this lens into the five dimensions of Policies, Procedures and Workflow, Scenario and Rules, Alert Management, and Case Management. 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 Case Management dimension, the NAMM defines the best practice target as being integrated and continuous case management throughout the client lifecycle. The model takes the dimension step-by-step through the five stages needed to achieve this goal. At the initial stage, case management is done largely through emails with little in the way of standardised procedure. NAMM leads the dimension through the improving, managed and mature stages to leading AML, where Case Management is fully automated, inclusive of automated data gathering and classification. This data is applied to improving multiple scenarios within your business.
If you would like to find out more about the Napier AML maturity model and view infographics and flow charts of it in action, you can download it here.
Technology and leading AML
An inescapable theme of the stages discussed above is the role of technology in leading AML. Whether it is to automate performance evaluation, optimise knowledge sharing or streamline processes, AI and machine learning are integral to the sector’s future.
The next steps in fighting financial crime
We have seen in this blog how the NAMM approaches achieving leading AML. We additionally guided you through the first three lenses of the model. Next week, we shall take a detailed look at the NAMM’s next three lenses, namely Data, Analytics, and Infrastructure.
This article is the third in a series of 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.