Converting AML Data into Risk Intelligence For Strategic Insights

With over $4.5 billion in AML fines for banks issued globally in 2024 alone, it’s clear that evolving regulations, intense regulatory scrutiny, and complex sanctions regimes are reshaping the compliance framework, and turning AML data into meaningful risk intelligence is now essential for moving forward.

The Financial Action Task Force, in its mutual evaluation report, has identified significant lapses in AML (anti-money laundering) data quality and reporting consistency across multiple jurisdictions; issues that directly hinder the early detection of suspicious activities.

In most cases, gaps in the AML screening lead to poor customer risk assessment and delayed results, which undermine financial integrity.

AML compliance in line with the risk-based approach requires accurate risk assessment of the customer, and this is only possible when AML risk screening solutions have accurate AML data.

When AML data gets aligned with advanced analytics and the monitoring tools, businesses get better equipped to differentiate the actual threats from AML false positives and allocate compliance resources efficiently.

Quality AML data serves as an essential tool that assists AML-obligated sectors in conducting accurate risk profiling of customers.

The foundation provides institutions with the capability to execute specific and result-driven due diligence when identifying high-risk activities.

What is AML Data? Perspective of Regulatory Authority

Within financial institutions, AML data supports the initial risk assessment of customers before any transactions occur.

Rather than waiting for suspicious activity to appear later, early customer risk assessment by screening against AML databases helps identify potential risks at the onboarding stage.

Below are some leading institutions that define and approach AML data in such a way:

Financial Action Task Force (FATF)

As per FATF Recommendation 10 on customer due diligence, financial institutions need to keep and collect AML data because it serves as their entire regulatory compliance framework for detecting money laundering and stopping terrorist financing operations.

The FATF indicates that data should support both risk-based approaches and compliance with due diligence procedures.

Financial Crimes Enforcement Network (FinCEN)

Bank Secrecy Act (BSA) states that AML data represents all collected customer information and transactional details for executing mandatory regulatory actions in customer due diligence, suspicious activity reporting, and continuous risk-based monitoring.

FinCEN requires financial institutions to handle precise financial records that let them identify and document suspicious transactions.

European Banking Authority (EBA)

The European Banking Authority states that AML data consists of every piece of crucial information needed for fulfilling European Union AML/CFT compliance requirements.

The collected data supports three essential functions to meet compliance obligations for customer due diligence demands, assess risk exposure, and evaluate the effectiveness of monitoring systems.

The EBA points out the necessity of collecting uniform and current detailed data to help organizations meet EU AML directives.

How Comprehensive AML Data Underpins Its Effectiveness?

The quality of data depends on its being comprehensive, which incorporates both the quantity of recorded details and its effectiveness in detecting risks against sanctions, PEPs, adverse media, warnings, and regulatory enforcements.

Comprehensive AML data not only impacts conducting accurate customer risk assessment in line with AML regulations of each jurisdiction, but also supports additional tools like AI-powered graph analytics as a foundation of data accuracy.

The integration of appropriate data not only helps with effective AML compliance but also prevents losses or dent in revenue due to uninformed de-risking.

Is the Data Offered by Your AML Screening Tool in Line with Your Compliance Programme?

The AML data from your screening tool should match the requirements of your enterprise compliance program. Each financial institution must ensure that the AML screening tool provides the AML Data to match its designated compliance program.

This is essential to ensure effective compliance in response to an organization’s actual financial crime vulnerabilities.

AML screening tools need to deliver dynamic and customizable, high-quality data because financial institutions operate under different risk situations.

Below are some examples of how different AML Obligated sectors in certain jurisdictions need to prioritize AML Data according to their risk appetite.

• The financial sector in Eastern European countries faces high risks for sanctions violations as they operate close to Russia, the country that is extensively sanctioned by the European Union and the United States after it attacked Ukraine.
• Companies in these countries must opt for AML screening tools that incorporate at least sanctions to ensure complete, updated data from EU sanctions lists, local sanctions lists, the U.S. OFAC list, and the United Nations Security Council’s Sanctions list, among others, to achieve total compliance standards.
• Businesses across the globe with access to the United States markets need to implement advanced screening technologies that provide clear labelling of secondary sanctions risk.
• This advanced context gives compliance officers a quick overview of the exact risk associated with a sanctioned name, as it reduces their review time and helps them make quick decisions.
• FinTech firms and Neobanks, particularly those providing instant payments, need access to real-time data of politically exposed persons and sanctions to ensure accurate ongoing monitoring and prevent transaction delays.
• High operational speeds in these fields produce inaccurate data, which leads to unrecognized risks and procedural deviations.
• Global banks with international clients must verify that their  AML screening systems integrate complete PEP databases and also conduct risk level assignments for each client jurisdiction. The institutions require specific screening parameters to fulfill anti-money laundering regulations in diverse countries.
• Such banks need to ensure that their AML Screening tools provide them with sanctions and PEP data from all over the world, even from jurisdictions with lower population or from war-torn countries.

Overall, AML data must be comprehensive, current, and customizable for aligning regulatory, geographic, and risk-related needs of different financial institutions.

But if we look at other pictures, incomplete data coverage introduces significant compliance vulnerabilities. Poorly integrated data leads to indicators of suspicious activity, which results in regulatory failures.

How do the Shortcomings of AML Data Impact Businesses?

Using an AML Screening solution with AML data that is not dynamic and static leads to increased false positives and false negatives.

This ultimately exposes the businesses to non-compliance risks, AML penalties, and revenue loss due to unnecessary de-risking of legitimate clients.

Starling Bank Case Study

Starling Bank, a UK-based digital bank, was fined  £29 million by the Financial Conduct Authority (FCA) for failing to carry out enough anti-money laundering (AML) controls in 2023.

The bank’s rapid customer growth outpaced its compliance infrastructure, which led to the opening of over 54,000 accounts for high-risk customers due to improper monitoring.

This lapse highlighted systemic weaknesses in customer risk assessment and transaction monitoring frameworks.

Lastly, the inclusion of comprehensive, high-quality data, through internal and third-party sources, is important for AML compliance.

Financial institutions can assist in complying with anti-money laundering laws which lead to the protection of their operations and reputations, by disintegrating data silos and implementing data intelligence systems.

Classification of AML Data Types

AML data is an umbrella term that covers external and internal data. The external one is used for screening against publicly available sources of sanctions lists and PEP databases. Internal data is the data that is generated throughout a customer’s lifecycle.

The complete process involves transaction patterns, onboarding information, and a change in risk status, because they are helpful in monitoring and compliance.

There are about nine types of data that usually appear throughout the AML compliance process by obligated sectors, as they connect to major compliance activities within different stages of the client lifecycle.

What truly defines the power of AML data? Each data category contains hidden secrets to aid comprehension, as listed in the following table. Let’s explore the potential of the following data types:

How to Select the Best AML Data Provider?

AML-obligated businesses and banks should look out for the following factors while selecting the AML screening tool for AML compliance.

Data Coverage and Accuracy

It is important to check if the provider offers comprehensive global sanctions coverage, including but not limited to OFAC, UN, and EU sanctions lists, along with the sanctions relevant to the financial institution’s specific risk exposure.

Confirm that the provider delivers extensive worldwide monitoring capacity, including PEPs data, adverse media screening, warnings, and regulatory enforcements, along with criminal watchlists.

Having access to reliable sources and real-time updates is crucial for minimizing false positives and ensuring regulatory compliance..

Regulatory Alignment and Certifications

The provider must establish compliance with global AML regulations that include FATF recommendations, along with the EU’s AML directives, FinCEN guidelines, and Anti-Money Laundering laws of each jurisdiction. Further, the screening solution should also offer certifications of ISO 27001.

Customization in Line with Risk Appetite

An ideal AML data provider should offer comprehensive data to empower AML-obligated sectors to customize data according to their risk appetite and internal AML compliance programs.

This customizability of data through customer risk profiles and a custom risk score based on the risk level of each jurisdiction enables better risk control measures, empowering them to comply with regulatory requirements.

Integration Capabilities and API Performance

Evaluate how seamless the integration process is with your current tech.  A provider system offers quick responses and permits easy deployment of solutions while enabling non-disruptive scaling.

Audit Trails and Reporting

Strong providers offer built-in audit trails, detailed logs, and customizable reports for internal reviews and regulatory audits. Detailed data tracking, when combined with reporting functions, enables authorities to hold companies accountable during their inspections.

How AML Watcher Supports Comprehensive AML Data Access?

AML Watcher offers a comprehensive screening solution for global financial crime compliance by providing extensive AML data coverage. Here is how it supports businesses in achieving effective AML compliance:

Extensive Global Data Coverage

AML Watcher offers data from 100,000+ data sources with worldwide coverage and refreshes its database every 15 minutes to deliver real-time access to global risk intelligence.

Instead of relying on third-party vendors, the AML Watcher utilizes an in-house team of researchers and data analysts to directly extract information from official and reputable sources.

It ensures data integrity and allows customization to match specific risk tolerance levels.

Key data coverage includes:

PEP Screening

• Covers 235+ countries and jurisdictions
• PEP risk assessment harmonized with jurisdiction-specific regulatory requirements
• PEP Data updates in response to regulatory changes and global political events
• Shares the Unified PEP definition to align with global PEP criteria

Sanctions Screening

• Includes data from 215+ international and domestic sanctions regimes

Adverse Media Screening

• Sources data from 415+ adverse media categories
• Aggregates insights from hundreds of thousands of trusted media outlets
• Screens against predicate offenses of money laundering and other risk categories.

Global Criminal Watchlists

• Gathers data from 3500+ global criminal Watchlists

Warning and Regulatory Enforcement

• Tracks warnings and regulatory enforcements from the court for violations of ESG, Anti-Bribery and Corruption regulations, and criminal convictions.

Data Changing With Regulatory Changes

• Data evolves in response to changes in political events like elections and changes in sanctions regimes like new listings or removals from the sanctions lists.

Enterprise-Grade Features

• AML Watcher offers scalability for global enterprises because it enables screening one client per second up to hundreds per second while ensuring both accuracy and efficiency standards.
• The platform is compliant with international standards, including GDPR and ISO 27001, to ensure data security and privacy.