Key technologies for companies to fight back money-laundering challenges in APAC

November 17, 2022 GeneAka Management Comments Off

Pandemic-induced isolation increased people’s online activity but also caused many to suffer from depression and insecurity. Criminals have taken advantage of this vulnerability to steal customer identities and take over their financial accounts to facilitate money laundering. Forrester sees that:

Crypto and trade-based money launderings are increasing. Crypto’s inherent anonymity and rising adoption by consumers in APAC have made it the new preferred way of the region’s criminals to launder money. In addition, the pandemic restrictions and global supply chain disruptions have increased trade-based money laundering (TBML) on the back of rising prices and cash flow challenges for manufacturers.
Customer identities and Hawala are used to launder money. The rise of e-commerce and social media in APAC and the digital and data footprints people leave behind make people more susceptible to identity theft. We also see Hawala significant uptake in APAC, because some countries have increasingly stringent capital controls, and some legitimate businesses and immigrant workers need to use underground banking to transfer money across borders.

Fight Back Using Automation, ML, Link Analysis, And Identity Verification

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The trends are causing companies in Asia Pacific to focus on several key technologies to address money-laundering challenges:

Automation enables the digital transformation of AML processes. Financial institutions use automation technologies like OCR and natural language processing (NLP) in AML processes to complement their limited pool of human investigators.
ML augments rule-based risk scoring and data processing capabilities. Models based on machine learning (ML) can detect patterns by observing customer transactions over time and anticipate financial behavior. They can also identify new money-laundering patterns to augment existing rule-based risk-scoring and boost data-processing capabilities.
Link and network analytics capabilities are developing rapidly. Graph technologies are effective at mapping potential criminal groups with extensive transactional links between accounts that are common in crypto- or hawala-based money laundering.
IDV uses rich data to augment know-your-customer and know-your-business processes. IDV solutions use public data sources, government databases, physical ID documents, phone numbers, and email addresses to triangulate and verify online identities based on real-world attributes.
SaaS adoption is gaining ground but varies by geography. Data protection concerns still play a significant role in the limited adoption of SaaS AML solutions. The adoption of converged fraud management and AML tools and processes and the predominantly SaaS-based solutions for detecting crypto-based money laundering will boost the SaaS delivery model in this field.

In our recent report “Top Trends Shaping Anti-Money Laundering In Asia Pacific”, we highlighted the top trends, technology adoption and regulatory requirements in the AML market in APAC. The report also showed how AML and fraud management pros should respond to these trends. To learn more details about AML trends in Asia Pacific, Forrester clients can read the full report or schedule an Original Post>