Managing AML compliance risk requires active engagement, critical thinking, and continuous improvement. Teams need to be proactive, adapting their controls to match the evolving methods criminals use to launder money.
One of the biggest challenges is balancing compliance obligations with business needs. Too many controls can slow down legitimate transactions, frustrating customers and affecting revenue. Too few, and the business becomes an easy target for financial crime. The key is risk-based decision-making – prioritising resources where the greatest risks exist while keeping processes efficient and practical.
Customer due diligence (CDD) is a key battleground. Criminals don’t advertise their intentions, and compliance teams must develop a sharp eye for suspicious behaviour. Enhanced due diligence (EDD) should be applied where there’s a higher risk of money laundering, such as transactions involving high-risk jurisdictions or politically exposed persons (PEPs). The challenge is knowing when and how to escalate checks without disrupting normal business operations.
Client monitoring is another critical area. The sheer volume of transactions in many regulated firms makes it impossible to manually check everything, which is why effective automation is essential. But technology alone isn’t the answer – false positives can overwhelm teams, and criminals know how to avoid detection by structuring transactions in a way that doesn’t trigger alerts. Compliance teams must regularly refine their rules and scenarios to stay effective.
Governance and culture play a major role in managing AML risk. Compliance needs buy-in from senior leadership and employees across the business. A culture that takes financial crime seriously will make it harder for criminals to operate undetected. Regular training, clear policies, and open communication channels can help keep AML risk front of mind.
Regulators are paying closer attention to how businesses manage financial crime risk, and expectations are rising. Compliance teams need to be ready for more scrutiny, whether in the form of audits, data requests, or on-site inspections. Being able to demonstrate a strong AML framework, backed by evidence of effective controls, will make these interactions far smoother.
