Inside every financial institution, anti-financial crimes teams are being disrupted, often because of the race towards digitization. Some worry that the few humans left will not have the entry-level experience and skills required to investigate complex cases.

Naturally, the corporate financial crime risk management department of the future will look different. And while each institution and jurisdiction will have its own nuances and innovations, the future of financial crime risk management will be defined by four characteristics:

1. Analysis and control: Fusion of enterprise-level intelligence

The financial intelligence unit at a bank resembles an intelligence analysis and control element of a military unit: A central hub for monitoring, surveilling, and reporting on threats, opponent capabilities, and enemy activities. Similarly, corporate financial crimes departments need the ability to see, monitor, and investigate every product, record, account, customer, and ledger within their financial institution.

This is necessary to assess risks and follow the money, while providing unique value to those seeking to serve customers effectively. To make this happen, future financial crime departments should work with data architects as well as privacy, security, and intelligence specialists. In this way, the overall tech-stack itself becomes a shared responsibility.

Yet as financial crime and related compliance functions become increasingly automated, more functions are being outsourced to machines, software, or overseas. So, if high-performing companies expect to build teams of exceptional talent, these remaining professionals should be re-grouped together as a team of super-specialists to protect the institution from bad actors. By creating an integrated intelligence function at the corporate level, the institution’s financial crimes, anti-money laundering (AML), and fraud departments of the past can take on their true form, adding value through specialized types of security and returning value once security is established.

2. Hybrid automation: Machines as human force-multipliers

Financial crimes departments of the future will adopt a hybrid approach, joining together AI-enabled tools and human expertise. And while institutions may no longer need hundreds of low-level analysts for rote tasks, many of them can instead become adept at prompting, reviewing, and tuning the output of these new AI-driven systems.

These tasks will require a few experts who are technically capable of managing the systems that conduct majority of entry-level review and data gathering. Then, these professionals can add true analysis, checking the work of the machines to make sure it is accurate, complete, and reasonably sourced. The so-called human in the loop should be adept at intelligence fusion and analysis as related to however they employ it.

These highly specialized people will use AI tools to triage, gather information, assess probability, and determine courses of action. Then investigators will take the machine work to the next level on each case, effectively handling larger caseloads than in the past.

3. The rise of the AI native and data-heavy user

As technology advances, the people in entry-level jobs require more technical competency to fulfill the roles of yesterday. It’s essential, therefore, that every person reviewing transaction monitoring understands statistics.

Financial crime departments of the future will naturally require individuals with specialized skills who are able to dig into technical tasks, design and enforce data security and privacy programs, get the most from single-use tech systems, and extract insights from large data sets.

Departments also will need to directly employ their own data scientists, model owners, implementation consultants, and technology professionals as part of the team. Managing these various models, subscriptions, rule sets, tuning, and validation requirements —  across so many technology tools — is a full-time job in itself.

4. Generating business value

It is said that compliance, especially AML, isn't for exiting revenue, it’s for protecting revenue. If done proactively, however, compliance can provide its own return on investment. If the compliance function establishes onboarding and risk-rating standards so that the institution can bring in good customers and keep them, while barring bad actors at the front door, that can return real value. It’s also cheaper and less cumbersome than the arduous tasks involved in removing a bad actor from a financial institution once they are in the door.

All team members at a financial institution should all have the same goal: to make profits, stock prices, and pay rates rise while serving as many good customers as possible.

From the compliance and risk management side, this will take the acceptance of a new paradigm: The intelligence hub described above can enhance the vision and profitability of the entire enterprise — not just serve as a cost-center that reports on and occasionally kicks out bad actors.

Today, when an investigator spends hours deciding that a large transaction pattern is legitimate, the resulting not suspicious determination goes nowhere. There must be business intelligence analytics that can find such insights and leverage them to improve the business.

Pathways to effective change

Of course, adapting to a new, painful normal without planning for the future can result in new and bigger problems that can be compounded with acquisition or growth. Financial crimes and risk management leaders should sketch out the ideal department for their needs, as well as the ideal software stack, team composition, and budget. Then, plan for this change by drawing a roadmap and generating a tactical approach that will get the institution's financial crimes department to the desired goal.

Criminal networks are not asking permission to innovate, so the financial services industry must adapt too if it hopes to stem the flow of illicit funds.

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