Abstract
Since the signing of the U.S. Patriot Act into Law in September 2001, anti money laundering (AML) compliance has become increasingly difficult to ignore for financial service institutions, and specifically for broker-dealers. As the intensity of scrutiny is only likely to increase over time, it is imperative that broker-dealers start planning for AML compliance with both short and long-term implications in mind. Good AML compliance is insurance worth having. Consequently, a proactive approach to AML compliance coupled with a willingness to invest for the long term will help broker-dealers deal effectively with new regulations and regulatory agencies.

As a first step, every broker-dealer must undertake a thorough assessment of where they stand today with respect to AML compliance along four key dimensions: knowledge, organization, technology and operations. A scorecard that evaluates the maturity of an organization along these dimensions will help identify gaps and points of weakness in both processes and technology infrastructure. With such an assessment in hand, broker-dealers will be better prepared to pick the right solution for AML compliance.

Since the range of AML technology solutions vary from simple filtering to the more sophisticated “intelligent” solutions, investing the time in understanding the trade-offs beyond the basics of cost of implementation is worthwhile. AML compliance is surely one area where broker-dealers around the world cannot afford to let their guard down.

Author Ramesh Subramanian

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