Money laundering threats, or financial crimes in general, remain a serious risk to businesses, governments, and economies. In order to combat these threats, financial institutions have professionals called anti-money laundering (AML) analysts. But why do their roles play such a large role in the maintenance of integrity in financial systems? In this article, we will discuss what an AML analyst is. What does an AML analyst do? And the importance and process of working as an AML analyst.

The Role of an AML Analyst

The AML analyst’s main responsibility is to monitor and analyze financial transactions for signs of money laundering, terrorist financing, and other illicit activities. The main task of these people is to see that the financial institutions comply with regulations designed to prevent financial crime. The role includes evaluating huge amounts of transactional data, identifying such activities, and replying to senior compliance officers or legislation authorities.

AML Analysts: Key Responsibilities

AML compliance analysts do several very important things to protect the financial institution and to ensure compliance with local and international laws. Here are the primary duties:

• Regular monitoring of transactions: AML investigators constantly monitor entering and exiting business transactions to identify irregularities or patterns that may be a sign of the money laundering process.
• Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD):  Analysts assess and verify customer identities. They perform enhanced due diligence for high-risk clients to gather more information about the client’s activities
• Investigation of Suspicious Activities: If the transaction is flagged, the AML analyst must investigate and gather all information related to it. These mechanisms include looking at transaction patterns, interviewing, or even investigating the client’s business relationships in order to establish whether the activities are legitimate or not.
• Suspicious Activity Report (SAR): If a transaction may be connected to money laundering or any other type of illegal activity, AML data analysts prepare a Suspicious Activity Report (SAR) for the relevant authorities.
• Data Analysis and Risk Assessment: Monitoring unusual patterns and trends is one of the key tasks of an AML analyst, and it can be done using data analytics tools. To classify customers and transactions in terms of the risk they represent, they employ various risk assessment models and classify them according to a certain degree of risk.

Bonus: AML analysts enable financial institutions to identify early warning signs, which protects them from regulatory punishments, bad reputations, and criminal associations.

AML Analysis Process

Several steps are involved in the process of AML analysis to detect and prevent financial crimes. Thus, the process involves the following key stages:

1. An automated system for filtering out transactions that may meet some or all red flags (for example, large sums of money moved to a high-risk country or region) is the first step in the AML analysis process.
2. After identifying suspicious activity, the analyst raises a concern about a transaction and conducts a review of how suspicious it might be. They may also carry out secondary analysis work to measure the risk of money laundering.
3. If flagged transactions look suspicious, further investigation of the flagged transactions is started. Analysts study transaction histories, where funds come from, and the behavior of the customer.
4. Suspicious transactions get reported, and a report is created. Then, this report is forwarded to the relevant authorities. Compliance and legal reasons require documentation.
5. Once the report has been submitted, the financial institution reviews the case to ensure that all aspects of the analysis are thorough and reasonable.

The Skills and Tools of an AML Analyst

Performing the AML analyst role effectively requires a blend of analytical and technical skills. Key skills and tools include:

• Analytical thinking: AML analysts have to spot the patterns in huge quantities of data and connect information that appears to be dissimilar.
• Attention to Detail: It takes a lot of detail to pay attention to financial records.
• Know the Regulations: They must have knowledge of anti-money laundering laws or regulations in place in their country as well as internationally, such as the Financial Action Task Force (FATF) recommendations.
• Technical tools: Modern AML analysts have to use the latest software and systems to monitor transactions, including Actimize, SAS AML, and ACI worldwide.
• Risk Management Software: Analysts apply risk management tools to assess clients’ risk profiles and manage flagged activities and SAR production.

Why Is the Role of an AML Analyst So Important?

AML analysts cannot be undervalued. AML analysis is aimed at depriving financial institutions and global security of preventing money laundering and terrorist financing, both of which are dangerous. This is a crucial role:

• AML analysts prevent large-scale crime because it enables them to identify suspicious activities early on.

• Financial institutions that do not detect and report such suspicious transactions run the risk of damaging the institution’s reputation, being hit with financial penalties, and even losing their operating licenses.
• Being an AML analyst and helping law enforcement agencies supply valid intelligence to conduct a criminal investigation and get convicted.
• Money laundering and terrorist financing harm legitimate economic activities. AML analysts prevent such activities to help maintain stability in the global economy.

Are you keen to know more about employment conditions for anti-money laundering compliance? Click here to read more.