Can a State-of-the-Art Sanctions Screening Application Boost Your ROI?

The question of whether or not to pay for a new app is dependent on context. If you run an older word processor, you may have to add a couple of new words to the spell check function every few months. But run anti-money laundering (AML) software without updated global sanctions screening functionality and you run the risk of giving criminals, terrorists, and other bad actors numerous ways to exploit your system, allowing them to continue with all kinds of nefarious activities.

Can a State-of-the-Art Sanctions Screening Application Boost Your ROI?

This alone should be enough reason to update to a more robust and more efficient global sanctions screening solution. However, the biggest barrier to updating software suites in most large financial institutions isn’t necessarily functionality but justifying the return on investment. Fortunately, AML and sanctions screening software is an area where newer systems tend to bring a superior ROI. Here are just a few reasons why investing in new AML systems tends to pay for itself.


1) Timelier Data, Timelier Decisions

Newer generations of AML systems are just faster than their predecessors. Even with more complex AI algorithms, improvements in software design and hardware utilization have enabled newer systems to screen individual transactions faster than ever before.
 
It’s not just about the speed at which systems process individual transactions either. Compared to older generations of software, newer sanctions screening applications can handle much higher volumes of transactions in a given amount of time. Additionally, report generation functionality tends to be better and faster across the board compared to systems from previous generations.


What this all means is that newer systems can give decision-makers the data they need in close to real-time. This alone makes newer systems a worthwhile investment compared to previous generations where the data gathered is almost always obsolete as soon as it is presented.


2) Better Uptime Means More Utility

Many older AML systems are self-hosted on on-site servers or individual desktop computers. While this is not necessarily a bad thing in and of itself, it can prevent financial institutions that use these systems from having the best possible utility from their solution. Even the best-equipped organizations tend to have problems maintaining internal systems, with frequent downtimes and poor utilization being the rule rather than the exception.

For the money, newer cloud-based systems will almost always give a better ROI, especially when they are handled by businesses that specialize in the hosting space. This specialization gives them the scale needed to effectively deliver superior uptimes at a lower cost compared to the vast majority of self-hosted solutions. Fewer and shorter downtimes also allow organizations to reassign system administrators and IT personnel to more pressing day-to-day matters, which improves labor utilization and ROI even more.


3) Fewer Software Integration Costs

Fraud detection is a complex activity with several discrete areas. Over the years, developers have leaned into the use of certain programming languages and protocols for specific areas of AML and sanctions monitoring. This was initially for expedience but had, over time, become a hindrance for updating, integrating, and automating the disparate parts of older systems.

However, as with other areas of tech and development, software integration is generally much better now than it was in previous generations. By upgrading to a newer system, you’re far less likely to experience hiccups in productivity and will always have all the different parts working as intended without the need for ad hoc manual solutions.


4) Reduced Labor Requirements

Speaking of ad hoc manual solutions, newer sanctions screening applications are also far less likely to require these as well. With older systems, particularly those developed a decade or more ago, it’s not unusual for users to have to export data to a different spreadsheet before manually inputting individual fields elsewhere. Newer software usually offers superior out-of-the-box automation and integration, which drastically reduces the time needed to have accurate data appear throughout all of the AML systems.
 
Additionally, machine learning is also much more sophisticated on today’s AML systems. Better AI reduces false positives and saves time when users make basic analyses, reducing the labor requirements for data analysis. This also allows higher transaction volumes to be sorted by a smaller team. Taking all these together, the labor savings of updating to a new AML suite will often recoup the cost of an update in short order.

5) Fewer Losses From Human Error

Jumping off the previous point, manual errors are inevitable when you are dealing with human inputs. In the context of sanctions screening, these errors may not only cost the company but could also result in innocent people being mistakenly implicated in the fraud. Additionally, these errors will increase the odds of bad actors evading detection. Being able to reduce these risks through a software update that uses smarter AI, machine learning, and automation will ultimately represent a good investment for most financial institutions.


6) Counter Contemporary Money-Laundering Techniques

New sanctions screening software is better able to detect novel patterns of fraud employed by various bad actors. Money launderers are often well aware of the capabilities of older AML systems and are thus able to use techniques to avoid detection.

While detecting new fraud patterns with older software is not impossible, it will often involve more human analysis work. And if these newer fraud patterns become more common, analysts may find more of their time dedicated to finding fraudulent activities that would have been immediately identified with newer tools.

ALSO READ: 5 Cybersecurity Rules you can teach your family at home

Update Your AML System Today

Newer AML software suites are faster, better-integrated, offer more transparency across the entire system, have better uptimes, take human fallibility out of the equation, and reduce labor costs. Given that money launderers are more sophisticated than they’ve ever been, all financial institutions, big and small, should look into the value of updating their AML systems.