Banks are making progress in connecting their fraud and anti-money laundering (AML) systems, but organisational silos and gaps in data sharing are limiting their ability to identify financial crime, according to new research from Datos Insights and SAS.
The survey of 165 fraud and AML executives across 21 countries found that while 71% of financial institutions are integrating their detection and monitoring technology, only 13% are aligning those functions with their governance, policies and organisational structures.
A significant gap exists between investment in technology and businesses’ ability to build a full picture of customer risk. Some 86% of institutions reported missing links between fraud activity and money laundering, while 87% said their ability to create a unified view of customer risk remained incomplete.
Organisational silos were identified as a major obstacle by 88% of respondents, followed by technology limitations (73%) and data governance and quality issues (70%).
“Fraud and AML teams can look at different pieces of the same risk and still miss the connection,” said Serpil Hall, strategic advisor for fraud and AML at Datos Insights.
“Technology can help bridge those gaps, but technology alone is not the answer,” she added, pointing to the need for better coordination across data, case management, investigations and information sharing.
The research also highlights the challenge posed by real-time payments, where money can move before traditional AML monitoring systems identify suspicious activity.
While 73% of institutions said their fraud and AML teams frequently or consistently shared data during active investigations, only 17% did so through automated monitoring.
Separate operations are also creating additional costs. Some 81% of respondents reported duplicate alerts or cases, while 71% cited higher operating costs from duplicated teams or technology.
The report recommended that banks connect existing fraud and financial crime compliance systems, rather than replacing their entire technology infrastructure, while improving data sharing and creating a more unified environment for investigations.