Expected Trends in AML and Fraud for 2022 Risk Management

Trends In AML and Fraud

Digital acceleration continues at full pelt, and organizations constantly upgrade their systems to stay on top. A research report by MarketsandResearch.biz, entitled Global Anti-money Laundering Systems Market 2021 by Company, Regions, Type, and Application, Forecast to 2026, shines a light on how the top players are handling these challenges. It’s not easy to manage. 

Criminals are using the latest technology to create more sophisticated scams that are harder to detect. AML and fraud can sometimes feel like a modern-day wild west of criminal activity. It’s become a cat and mouse game that goes round in circles. 

Risk Management In 2022

Data breaches in 2021 surpassed 2020 way before the end of last year. This trend will continue in 2022. The only way to counter any potential threat to your company or avoid a fine is to improve your risk management process. It might seem an arduous task in an industry that is constantly evolving. But by following the expected trends, you can get informed and start conducting more stringent risk assessments. 

The COVID effect on AML and Fraud For 2022

Planet Compliance asked Darren Cade, the CEO at Arctic Intelligence, to give his deep insight into how things will shape in 2022. He said, “COVID has seen increased levels of fraud, so in 2022 we expect to see continued improvement in how organizations conduct fraud risk assessments both in terms of scope, frequency, and automation.

For AML, we expect to see continued focus on enterprise-wide or firm/business-wide risk assessments by regulators, and it is likely that many will issue additional guidance on the topic. Expectations will continue to increase and drive more organizations to seek technology to automate some or all of the processes.”

Arctic Intelligence was recognized as Australian RegTech of the Year and secured a strategic partnership with the International Compliance Association (ICA) at the end of last year. This alliance has already helped expand the network of ICA’s financial crime professionals and improve global regulations. Arctic Intelligence is a perfect example of a RegTech business offering state-of-the-art risk assessment services. 

The Main Trends In AML And Fraud For 2022 

Some trends from 2021 will speed up, but new ones will continue to emerge. At the same time, CFOs and other executives will have their challenges to deal with in 2022. Critical trends need to be monitored and addressed in any risk management planning process for 2022. It’s all part and parcel of complying with AML rules and creating a watertight system for your entire organization.

Automation Will Be Key With Advanced Technologies

It’s clear from Darren Cade’s predictions that automation will be essential for organizations. You will need to have the proverbial finger on the pulse and continuously fine-tune your risk management system. Also, when it comes to AML and Fraud, legislation and regulations need to be handled quickly. No more clunky spreadsheets and manual maintenance. It is time to move to an automated system that is more manageable and will keep you on point.

Closer Collaboration Between Regulators And RegTech Organizations

Regulators need to show a heavy hand to ensure everyone is compliant. Closer collaborations will be required in 2022 to improve the industry. The concept of regulators working with RegTech organizations is a great move forward. It will help programs roll out quicker. Plus, RegTech enterprises will have a real platform to highlight concerns before problems arise.

Using New Data Solutions To Improve Quality

An example of better collaboration would be with the management of data quality. It is always a bugbear of regulators, and new data solutions will be the answer. The data companies hold internally for KYC-AML is usually spread across the whole enterprise. It can also be inaccurate, incomplete, and inconsistent. These are all total red flags for the regulators.

Data quality issues are the main problems associated with KYC-AML functions. This data includes customer reviews, due diligence, false alerts, inaccurate risk profiles, and time-consuming investigations. Financial crime compliance managers will need to find ways to manage both their external and internal data better. It will be easier to track compliance issues and address them quickly. 

More Transparent UBO Laws But Not For Everybody

The drive for a culture of transparency means Ultimate Beneficial Laws (UBO) legislation is about to become more serious. This greater transparency will let financial firms sign into monetary transactions and identify the risk of money laundering. Additionally, banks will be able to improve their Customer Due Diligence (CDD) processes, which will help them reduce the number of financial crimes.

However, there is also a flip side when it comes to the future of UBO Laws. Some countries are refusing to take on board these new measures. Switzerland is an example of one country with no intention of following suit. The criminals will be rubbing their hands in glee as they access shell firms. The result will be very noticeable in 2022, with higher financial crimes and money laundering in countries that do not adopt the new law.

AI Will Speed Things Up

While many industries have mixed feelings about AI, there is no escaping that it is here to stay. There is no way AI could completely replace humans in AML and Fraud detection. But some form of AI involvement will help speed things up for businesses. No forward-thinking company would knock this idea back when time is of the essence and time equals money.

Real-Time AML and Fraud Detection Will Improve

Account Take Over (ATO) and dark web activity will continue to cause significant problems for organizations. This damaging activity has shown an urgent need for real-time AML and fraud detection screening solutions. Also, don’t forget the current push for AML screening for every crypto customer. 

Alternate data from external sources can help create a digital footprint of both existing and potential customers. For example, you can also gather and assess data from:

  • Corporate Registries
  • Investigative Journalism reports
  • KYC utilities
  • Open-source intelligence (OSINT)
  • Shared fraud databases
  • Web media

In Summary

While the criminals continue to take advantage of this fluid situation, all organizations would be wise to review their 2022 risk management plans. You might think you have considered all the options to protect yourself, but the industry constantly evolves. You can act now to safeguard your organization and stay ahead of potentially damaging activities. 

Sally Leslie

Sally creates B2B content for businesses, entrepreneurs, and startups. She has a PR degree and a background in business development and sales. She is passionate about motivation, time management, and the changing world of finance.

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