Data Warehouses Permit a Holistic View of Customers' Activities

Technology plays a significant role in the development of effective AML-related compliance programs and systems. One technological innovation that enables banks to be more effective in their AML programs is the creation of a data warehouse or data mart for consolidating customer, account and transaction information. Using a data warehouse enables a bank to query data from multiple transactional systems and obtain a clear view of a customer's universe of activity. Additionally, using automated transaction monitoring systems can help provide this view. The most effective systems are built on an open data model; the resultant compliance database acts as a data warehouse that, in turn, serves as a data source for other queries and reports.

Financial firms must develop a risk assessment system. An effective risk assessment process provides institutions with an assessment of a customer's risk for money laundering. Most institutions currently have a risk assessment process in place; however, the process often is manual or spreadsheet-based and inadequate to accomplish all of the critical goals of a risk assessment system.

A firm's risk assessment system must be able to validate the risk calculations, capture the documents that establish the individual's identity, and ensure that the process continuously monitors changes to the customer risk profile based on the customer's transaction history and reference data. As part of this process, the customer's risk needs to be reassessed -- based on any changes in behavior as well as periodically. The risk assessment process should then tie back to a transaction-monitoring system using a risk-based approach. In this way, if a customer's behavior indicates an increase in risk, then he or she will be monitored more closely.