by InScope-AML

October 06, 2023

Ensuring Data Quality in AML Compliance Management

Data Quality is a crucial aspect in AML Compliance Management since effective management of this function is only as good as the data it uses. Incomplete or incorrect data raises red flags when these shouldn’t be raised, and let’s risky situations pass unnoticed when the red flags should have been raised and action taken.

Poor data quality leads to poor risk assessments, reputational risks, staff demotivation and, potentially, fines for inaccurate record keeping or worse.

Ensuring that AML Compliance data is complete and correct requires that a number of factors are in place.

To begin with, there should be a central repository of information, rather than have a system where data is spread out in spreadsheets, manual files, and other disjointed components. Ensuring a Single Source of Truth is a fundamental characteristic of an effective information management process.

It is also important to ensure that when data about a customer or company is collected the first time, this is done through a rigorous process that does not depend on human discretion. Processes must be in place so that proper KYC procedures are adhered to and the required information is collected according to the risk profile of the new customer being onboarded. Enforceable checklists will ensure that no steps are skipped. Failure to do this is tantamount to a “garbage in — garbage out” scenario.

Such a system would also need to be accessible only to authorised staff with user permissions to ensure that only authorised people can perform specific actions. Audit trails would also be required to enforce accountability.

Collecting the right data is only the first step, albeit a very important one. Procedures must be in place to ensure that when things change, the data reflects this.

Changes to entity details or risk policies should trigger the collection of additional information. Document expiry alerts should be in place to ensure that all documentation held is valid. Taking action based on adverse media and sanction lists keeps the team on top of things, as will the data.

Data should also be kept protected. We already mentioned the importance that not everyone within the company should be able to change things, unless this forms part of their responsibility. This also applies to people outside the organisation as access should only be granted through proper authentication.

And whether the data is hosted on premise or on the cloud, data needs to be backed up to ensure that data is never lost.

Enforcing data quality is an ongoing process. The right AML Compliance Management solution ensures that it is built into every process that is carried out.

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