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Anti-Money Laundering
Conceptually, money laundering consists of any activity carried out in order to disguise the origin of money that has been acquired by criminal acts. These activities can be broken into three stages
  • Introduction of the illegal profits into the financial system (placement)
  • Conversion or movement of funds to distance them from their source (layering)
  • Re-entering funds into the legitimate economy

Money laundering has increased significantly during recent years, fostered both by the globalisation of the world economy and by the spread of electronic banking. Today, the aggregate size of money laundering world-wide is estimated to comprise 2.5 percent of the world's gross domestic product. The detection rate is marginal. Not only the direct victims of the underlying criminal activities are damaged. Money laundering has negative macroeconomic consequences (e.g., law enforcement costs) and negative consequences also for financial institutions (due diligence costs, fines, risk of reputation damage, etc.).

International and national legislatures have responded to the growing amount and professionalism of money laundering activities. Financial institutions are obliged to implement IT-based monitoring systems that help to detect suspicious transactions. A pure rule-based methodology is no longer considered sufficient. Data mining techniques are required to support the monitoring process in order to select precisely all transactions, accounts, and customers that are apt to justify further investigation.

The significance of Anti-Money Laundering (AML) has been recognized in all financial centres around the globe. Financial institutions are pushing strongly to implement IT-based AML systems. The range of different AML-solutions at their disposal varies in the methodology applied as well as in their maturity.

Independent of the Make-or-Buy decision, it is crucial that, from the outset, an AML technology is identified

  • That is suitable to its specific portfolio of business activities
  • That fits in its current IT-infrastructure and data management framework
  • That is flexible enough to keep pace with tightening regulations that are expected in the near future.

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