The hidden costs of AML Compliance Management

When it comes to assessing the real costs of AML compliance management, as well as the return on investment in any dedicated AML compliance management software, one needs to look beyond the purchase price, or the monthly subscription, and consider the total cost of ownership. This will invariably include some indirect or “hidden” factors, including the opportunity cost of a manual equivalent.

There is a misconception that the monthly subscription costs could be saved if an internal resource could dedicate “a few hours” each month to manage the AML compliance process. Technically this is correct, in so much as the software license fee could be saved. However, when weighed against the opportunity cost of internal resource not being available for fee-generating work, it represents a false economy.

The use of dedicated AML compliance software automates manual processes and frees valuable, highly trained resources from mundane tasks to focus on activities that directly impact the bottom line. So, what are the mundane tasks that can be handled by AML compliance software and leave your employees with more time on their hands to focus on what is more important?

Manual or spreadsheet-based AML compliance systems require a lot of duplicate data entry, which would otherwise be avoided, and require staff to continually check for expiring documents, changes to country risks, additions to sanction lists etc. They also lack meaningful audit trails and make supervision unnecessarily complicated. Furthermore, it is difficult to manually determine ultimate beneficial owners easily and to provide ad-hoc reports for internal or external use.

By freeing up time, AML compliance software allows you to keep abreast of developments in this very specialised field and find time to provide training to others within the team, rather than having to source training externally. Having the right solution in place also helps avoid employee burnout and demotivation, which can lead to high turnover rates and the creation of a negative cycle of recruit, train, replace.

Of course, when it comes to assessing ROI, there is the potential for significant value if you can avoid regulatory penalties arising from compliance breaches. In the UK and Europe, AML fines tripled between 2020 and 2021 as watchdogs clamp down on breaches of policy and protocol.

Finally, data retention and retrieval in the event of a “disaster” can be difficult with manual or locally stored records. The inherent resilience of SaaS solutions accelerates the time to recovery and minimises the potential for downtime.

The next time cost is used as an argument against AML compliance software, remember the potential cost of not having the right systems in place may be significantly higher than the costs of an AML compliance management solution such as InScope-AML.

For more information about InScope-AML, please download our eBook here.

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