Speaking at the Association of Certified Anti-Money Laundering Specialists (ACAMS) Assembly Conference in Las Vegas in mid-September, John K. Hurley, Treasury’s Under Secretary for Terrorism and Financial Intelligence laid out Treasury’s vision for modernizing the Bank Secrecy Act (BSA) and the system of AML/CFT compliance that underpins it.
The great news for compliance leaders and their teams is that Treasury’s new vision for AML/CFT compliance entails multiple pragmatic changes that will help you focus your teams’ efforts, streamline the process, and deliver improved results that align with Treasury’s enforcement needs.
Focus on outcomes, not volume
Treasury’s concept for reforming the system is simple—give law enforcement and the national security establishment the most relevant information which they can use to stop money launderers and terrorist financiers—and give it to them in a timely manner. Hurley stressed that everyone in AML should focus on that shared mission and view law enforcement and national security establishment as the customers of compliance efforts: “…our North Star will be to remain laser focused on that customer.” He added, “AML/CFT programs should deliver better outcomes by providing those customers with the most useful information, not by overwhelming the system with noise.”
The Under Secretary also provided relief to financial institutions (FIs) by noting that Treasury needs to let compliance teams know what specific information is valuable and what information is not.
Please use AI and other well-governed technologies
Hurley believes that well-governed technology is a force multiplier. He used as an example the occasions when an FI invests the time and money to experiment with AI and successfully drops their false positive ratio while escalating the vital information that matters to law enforcement more rapidly. According to Hurley, “their [the FI] team should be celebrated, not written up.”
The Under Secretary also touted another value of advanced technology, stating that this new approach to well-governed technology reveals gaps in compliance teams’ previous manual method, helping them to improve.
Don’t sweat the examiners
The Under Secretary’s comments portray the coming paradigm shift toward technology-enabled outcomes over information volume: “…if we measure you by how well you objectively deliver what our customers need, rather than by how closely you conform to an examiner’s subjective opinions, it will allow you to apply your experience and creative talent to invent new and better solutions.”
Now, that may have you wondering about the specific changes. However, Hurley acknowledged that he and the other leaders at Treasury must give examiners clear guidance on the objective measures which Treasury values while eliminating examiners’ incentives to “protect themselves with paper on the score.”
To further make life easier for the examiners and compliance leaders, Treasury intends to replace subjective assessments of process with objective measures of output.
Streamline your resources
Under Secretary Hurley addressed the massive number of resources which FIs have traditionally poured into staffing up for, and performing, AML/CFT compliance processes. “…compliance takes real resources. That’s why prioritization matters. Limited resources should be allocated to the most pressing threats,” he told the ACAMS conference audience. His statement is spot on, and we have articulated that position in both our guide for optimizing compliance operations via a digital workforce and this whitepaper that explains how AI Agents are streamlining compliance operations while reducing risk.
Hurley went on to highlight the need for FIs to reduce their focus on how their program looks, such as hiring an army of employees and outsourced staff to demonstrate their commitment to regulators. Instead, he believes that compliance leaders should measure themselves by how well their programs capture and proactively reports what law enforcement needs, and secondly, “how rarely it fails to identify activity it should be capturing, especially when that activity utilizes known typologies.” The failure to identify true risk and how to remedy that situation is addressed in our recent whitepaper Removing the False Positives Noise from Adverse Media Monitoring.
What it all means for FIs that don’t evolve
The writing is on the wall—the time has come to modernize compliance programs with well-governed AI and other technologies. While AML/CFT leaders have unanswered questions in their minds about how to move forward with AI, based on the strong commentary by Hurley on this topic, gaining answers to those questions should be a priority for compliance leaders today.
AI is already in use at numerous FIs. In fact, WorkFusion AI is currently being used successfully to streamline AML compliance programs at 10 of the top 20 banks. If your organization does not evolve to deliver better outcomes, you are likely to stand out as a resistor, and regulators will view your program as riskier than those of your peers.
We agree with Treasury’s new vision
We agree that documentation is a burden, and we’ve already solved it for numerous AML/CFT compliance teams at banks around the world. Read some of our customer stories to learn more.
