How Tech-Based On-Premise AML Compliance Solutions Build a Secure AML Environment?

In this digital age, where Anti-Money Laundering (AML) regulations are rapidly evolving alongside the growing threat of Cybercriminals targeting RegTech solutions to steal consumer data, financial Institutions are evaluating ways to deal with the twin challenges of maintaining AML compliance and safeguarding their client information.

Due to devastating consequences that come with non-compliance and data breaches, the stakes for financial institutions are incredibly high.

As financial institutions or obligated sectors use technology to automate AML screening, selecting between cloud-based and on-premise AML solutions becomes a difficult decision.

Why not explore the technical details of both options, which will help organizations make well-informed choices based on their specific needs.

Before we discuss the merits of cloud based and on premise AML compliance solutions, let’s review some of the recent stats that impact the decision to choose between these two options.

Verizon’s 2024 Data Breach Investigations Report (2024 DBIR) analyzes an incredible 30,458 security incidents that took place between November 1, 2022, and October 31, 2023. Out of these occurrences, a staggering 10,626 verified data breaches were examined, which is twice as many as were reported in the previous year.

The breaches affected companies in 94 different regions, providing us with a worldwide perspective of the state of cybersecurity today.

The same report points out the rising trend in cyber attacks, giving a heads-up to organizations operating in any sector.

What makes the financial industry a prime target of cyber attacks is the sensitive nature of the data it holds, specifically personal and banking details of its clients.

A data breach for a financial institution means significant financial and reputational damage due to halting or disrupting its operations, regulatory fines, and losing customer trust.

Calculating the true cost of a data breach is a somewhat complex and arduous task. IBM’s 2024 Cost of Data Breach Report estimated that a data breach in the financial industry costs $6.08 million on average.

IBM report found that of all the data breaches that occurred, 80% stored data on multiple or cloud-based environments as compared to 20% that solely used on-premise infrastructure.

Additionally, financial institutions need to maintain the security and confidentiality of their data as mandated by the data security and privacy regulations. A UNCTAD Report stated that 137 out of 194 countries have already implemented legislation to regulate data security and privacy.

These regulations detail how data should be collected, used, or shared with third parties, all requiring explicit prior permission from their clients.

In this increasingly risky and tightly regulated environment, the case for an on-premise AML compliance solution becomes undeniably compelling.

Why Financial Institutions Should Choose On-Premise AML Solutions

Financial institutions have full control over the sensitive data of their clients and infrastructure, like networks and servers that connect it, when using on-premise AML solutions. Whereas in cloud-based AML solutions, data is stored with a third-party-controlled infrastructure.

On premise deployment method involves installing AML software in the organization’s own hardware.

This complete control over their data and its infrastructure has many advantages, especially in an environment where regulatory compliance is non-negotiable and data breaches have become a common phenomenon.

Some reasons why an on-premise AML solution provides a stronger shield for your institution:

• Secure as Desired: On-premise solutions allow the implementation of customized security measures, which are specifically tailored to the organization’s needs and risk profile. Direct oversight of security protocols that reduce reliance on third parties and mitigate potential vulnerabilities that come with cloud environments.
• Control as Needed: Hosting an AML compliance solution on-premise allows full control over who can access sensitive data. This control is particularly crucial for adhering to strict data governance requirements and sailing through the complex web of global data privacy regulations and AML measures, including those that mandate data localization.
• Keep cybercriminals away: The statistics are clear that cloud environments face a much higher risk of data breaches. On-premise hosting of sensitive AML data significantly reduces exposure to the broader range of threats targeting cloud infrastructures.
• Better Regulatory Compliance: Many countries have strict regulations on data transfer, and some go even further, like data localization laws for financial data. An on-premise AML system means the data is hosted within the country to ensure compliance with local regulations.
• Greater Customer Trust: Customers feel more secure when they know their personal information is stored in a secure environment and is only accessible for legitimate business purposes.

How On-Premise Solutions Lead the Way in AML Compliance?

On premise solutions also provide broad customization options, which enable organizations to tailor the services according to the organization’s risk appetite and AML functionalities needed.

Such solutions provide a comprehensive set of services to choose from, such as PEP screening, sanctions screening, adverse media screening, and transaction monitoring. This flexibility is also very beneficial in smooth API integration with existing legacy systems and other banking operations.

Some on-premise AML solutions also offer real-time data synchronization with the organization’s internal database for the smooth running of AML processes.

The data of sanctions lists and politically exposed persons (PEPs) list is usually updated in near real-time to ensure compliance with financial sanctions and enhanced due diligence obligations.

Is your sensitive data secure and in your full control? Don’t leave your institution vulnerable to the rising tide of data breaches and the increasing pressures of regulatory compliance.

AML Watcher offers on-premise AML compliance solutions, a robust and secure approach to provide you with the control and peace of mind needed to run your business in this challenging environment.

Are you ready to take control of your AML compliance and strengthen your defenses against data breaches? Contact AML Watcher to learn more about how our on-premise AML solutions can be your fortress against the emerging threats.