Financial institutions find themselves under mounting pressures from regulators to step up their anti-money laundering (AML) game, but a new report from Boston-based Aite Group – authored in association with security company Early Warning – raises serious questions about the effectiveness of the programs.

The report is titled: “Anti-Money Laundering: A US$2 Billion Search for the Needle in the Haystack.”

“The crux of the issue is that banks are doing these things to keep the regulator happy,” Julie Conroy, research director for retail banking at Aite, said in an interview.

She added, “Keeping regulators happy is not necessarily what is most effective in the quest to stop money laundering and terrorist financing.”

“We are seeing disconnects among the examiners,” said Conroy. “The local examiners are saying different things than the national regulators.”

Often, she added, “The AML regulators are fighting last year's battle” – that is, the techniques deployed by criminals are evolving at a brisker pace than the regulatory guidance.

In an encouraging word for credit unions, Conroy said, “I would not say the big financial institutions are the best at this necessarily. There are a few smaller FIs that are very good

Some credit unions are a little better at collaborating across silos than are bigger banks.

“There is a strong need for more dynamic and real-time data-sharing capabilities both within and among financial institutions. Banks should use improvements in technology to eliminate the clunky and often bureaucratic processes that characterize the sharing of data, and become more dynamic and proactive in their AML detection capabilities. Some early movers in the U.S. market are doing this,” Conroy added in a prepared statement.

A copy of the report is available here.

Instant Insights /

Report: Aite Questions Effectiveness of AML

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