Boosting Anti-Money Laundering through Ongoing Due Diligence

Boosting Anti-Money Laundering through Ongoing Due Diligence

The need for a more risk based Anti-Money Laundering (AML) approach is now widely recognized. Despite this momentum, putting a better risk-based AML approach in practice is a challenge.

A foundational concept will be an increased reliance on automated risk detection mechanisms and a more risk differentiated review of clients. This NextGen AML publication covers six enablers of this more risk based and automated ‘Ongoing Due Diligence’ (ODD) framework.

Article Karin de Jong en Marit Hoegen, Deloitte

As noted in our earlier NextGen Anti-Money Laundering publications, we see that regulators, supervisors, financial institutions and law enforcement are all striving for a more effective and balanced AML approach. The term ‘risk based’ is often used in this context, to describe that AML efforts by financial institutions (FIs) should be more sharply and proportionally targeted at possible forms of money laundering and terrorist financing. And not disturb or disadvantage bona fide clients.

The recent risk-based roundtables and NVB Industry Baselines are an attempt to provide guidance in operationalising the risk based approach. ODD can be seen as the comprehensive set of processes, procedures, actions and measures taken by banks to screen and monitor clients, their transactions and behaviour continuously1. One area of opportunity that could substantially increase efficiency gains, is in the automated trigger-based Ongoing Due Diligence (ODD) of clients. In practice, most FIs are conducting manual client reviews on a periodic basis. These manual reviews are time-consuming, provide (relatively) limited added value to the mitigation of money laundering risks, and have a negative impact on client satisfaction and data privacy.

[....]