Technology is rapidly changing the way organisations deliver products and services to customers. But with these advances and increasing connectivity comes greater risk.

Matt Saint, AXA’s Group Anti Money Laundering Officer, points out that technology’s impact has been clear to see. “In the early years, the technology was pretty static but then there were developments, particularly relating to client identification and the electronic identification of customers,” he says. “Subsequently you’re starting to get more into the automation of activity monitoring and then today we see further developments of digital biometric client identification.”

Biometric identification is something that Lloyds Group has prioritised. “A lot of the success we’re having is thanks to behavioural monitoring which is about device IDs and indicators of unauthorised access,” says Brian Dilley.

“We do this in both real-time and post-event but my view is we need to move away from purely monitoring transactions and into monitoring of behavioural characteristics. This involves looking for indicators in the way people log on and use their device that show they are up to no good. It’s perfectly legitimate for an application to be made by one device for more than one name but once you go past a certain number it’s highly unlikely that those are legitimate. It’s not about merely complying with the regulations but more about reducing harm. We’re deliberately called ‘Fraud and Financial Crime Prevention’ rather than ‘Fraud and Financial Crime Compliance’ which is a deliberate statement because we’re not just about complying with regulations, we’re about preventing fraud and financial crime.”

As you’d expect, preventing money laundering and terrorist financing are twin priorities for governments and regulatory bodies worldwide. And when the increasing prevalence of cross-border data exchange is twinned with customers’ justifiably high expectations around data security, it should come as little surprise that compliance legislation has become more complex and wide-ranging.

For example, in some parts of the world insurers may be compared to banks, and regulators may subsequently expect them to adopt similar standards of control. Regulators are also insisting on more detailed Suspicious Activity Reports from institutions. If financial institutions fail to comply with such regulatory obligations they risk multi-billion dollar enforcement actions.

It is important to note that regulators today do not always have a consistent approach around the world, for a variety of reasons move at different paces in different places. Countries bracing for an evaluation from the Financial Action Task Force may seek to ratchet up their levels of compliance prior to the arrival of the inspection team but take a step back, and you can see that some regulators adopt a light touch, whereas others are more aggressive.

Although the regulators in some of the smaller geographies tend to be focused primarily on domestic issues, this is not always the case. There are a number of these geographies across the world that pride themselves on a high level of compliance that mirrors regimes in place in Europe and North America.

AML activities – both non-real-time and real-time – help make information more readily available across an organisation. This is partially helpful in breaking down the silos that can all too frequently occur between those working in AML and their colleagues in fraud prevention. AML systems draw from a wide range of transaction types and sources and these can potentially provide the fraud detection teams with valuable intelligence – especially if this can be provided in a timely manner.

The push for Real-Time Transaction Monitoring has not appeared overnight. Rather, it has emerged as a result of myriad different factors and developments. Even now, it has yet to meet with universal acceptance amongst financial services companies and law enforcement agencies.

But it’s important to note that these things take time. Technology needs to be rolled out, staff need to be trained, and organisations require the necessary resources and confidence in order to fully augment their AML arsenal.

It seems likely that Real-Time Transaction Monitoring will continue to gain traction in the months and years to come. Digital technology will continue to evolve; financial firms will be under ever more pressure to submit better reports; the number of false alerts will continue to rise and criminals will always seek new ways to hide their illicit gains.

A decade hence, we can say with some certainty that the AML environment will look very different to that of today. Although there will still be traditional AML activities – possibly driven by machine learning – monitoring checks will be likely happening in real-time, as will closer interaction with fraud detection teams.

As a result, those organisations which start to invest now in forward looking AML technologies will not only reap competitive advantage, but also be better placed to prevent money launderers from successfully penetrating their defences – both now and in the months and years to come.