Narrowing the quality criteria for anti-money laundering commercial-off-the-shelf (COTS) software products under the Bank Secrecy Act

Emil Ivanov

The Anti-Money Laundering (AML) regulatory acts such as Bank Secrecy Act , Foreign Assets Control Regulations , Financial Record Keeping and Reporting of Currency and Foreign Transactions regulations , and the USA PATRIOT Act provide guidance to organizations for developing and maintaining systems of internal controls that are flexible to changes in the business and operating environments. Due to the constant proliferation of criminal and terrorist activities throughout the world, financial institutions should adapt their AML-related business processes and tools to address these risks.

Emerging technologies, together with the expansion of the Internet’s cyber banking commerce, transforms the money laundering processes to make it significantly easier for launderers to hide its origins, insert dirty money into the financial sector stream, wash it through authentic businesses, and then integrate it back into the economy. As a response, organizations should expand the features for traditional AML tools and add capabilities, such as tracking IP addresses with timestamps, cyber-event data, and virtual-wallet information – to follow criminals, identify victims, and trace illicit funds.

The software tools used through various stages of the AML are aimed to attain effectiveness and efficiency of operations, reliability of reporting, and compliance with applicable laws and regulations. Because of the swift growth in the software technologies and the necessity for businesses to adapt to money laundering typologies, the use of independent audits are the way AML software integrate into internal control environment and is of high interest to the financial institution, information systems community, auditors, and regulators.

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