Global AML Insight Series

A leading approach to encourage the sharing of information across the globe Survey Topic: The Effectiveness of Transaction Monitoring
June 1, 2010

Table of Contents
Topic Overview Survey Highlights Implementation Considerations and Strategies Effectiveness of Solution Transaction Monitoring and Alert Tuning Techniques Current and Ongoing Costs/ Overall Satisfaction Key Contacts 1 2

5 8

Executive Summary
The Association of Certied Anti-Money Laundering Specialists (ACAMS) and Ernst & Young LLP (EY) recognized the need for thought leadership in the AML community that is both timely and focused on current topics and trends. We agreed that a series of surveys would best address this need. On a periodic basis, the survey series will explore emerging anti-money laundering strategies and practices, ranging from program design and effectiveness, to leading practices for mitigating the risk posed by money launderers. Our intention for the Global AML Insight Series is to encourage the sharing of information across the globe and industries, and to facilitate AML program comparison and improvement. At the onset of our endeavor, we established principles to guide all surveys within the series. First, surveys had to be designed in such a way that they can be circulated multiple times per year. With this core principal in mind, each survey had to be brief and exible enough to address hot topics, target various nancial institutions across the world, and provide a multiple choice style format to ensure consistency across languages and industry sectors. To maximize the response rate and capture honest answers, all survey responses had to be condential. We are pleased to provide the results of our rst survey The Effectiveness of Transaction Monitoring. We hope you nd the survey results valuable and thoughtprovoking.

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19 Back Cover

Topic Overview
The rst survey of this series is focused on one of the most debated topics among AML professionals and regulators the effectiveness of AML transaction monitoring. Financial institutions of all sizes are challenged with generating productive results while also balancing the investment required to achieve these results. Transaction monitoring is one of the key agenda items for AML compliance professionals when addressing their regulatory requirements. It also is one of the more costly components of an AML compliance program and may require sophisticated technology solutions to integrate into complex operational environments. In this survey, we explore: implementation considerations and strategies; effectiveness of solutions; transaction monitoring techniques and alert tuning; challenges faced; and current and ongoing costs, and overall satisfaction.

Survey Highlights
Participation
The survey was submitted to AML compliance ofcers within large nancial institutions (global and regional) around the world. Over 50 responses were collected which represent over 20 countries. The map illustrates the geographic distribution of these survey responses. No signicant differences were found in the responses based on the geographic distribution of the responders, and as such, none of the following survey results are broken down by geography. The following survey highlights investigate correlations in the survey responses that may provide insights into how nancial institutions get the most from their transaction monitoring systems. The next section addresses each of the individual survey responses and provides observations and highlights from the responses.

Implementation Considerations and Strategies

The majority of responders implemented a vendor purchased AML transaction monitoring system, used a data hub to support this system, and used this single system to monitor all lines of business and jurisdictions. Only one survey responder relied on manual methods. Credibility with regulators was noted as a key consideration when selecting a vendor system over an in-house developed system, while the upfront costs in-house were the key considerations when selecting an in-house developed system.

Americas 59%

EMEIA 30%

Asia Pacic 11%

Effectiveness of Solutions
Over half of the responders noted that the most effective alerts came from their transaction monitoring systems, as compared to alerts being generated from the customer on-boarding process or from manual referral of suspicious activity. Over 50% of survey responders reported that less than one in ten of the alerts generated by their transaction monitoring systems resulted in meaningful investigations. Interestingly, 20% of responders reported less than 3% of their alerts are productive. Several responders, however, reported productivity rates higher than 50%. If these responders are removed from the analysis, there is a correlation between the length of time since the system has been installed and the effectiveness of the alerts being generated, presumably due to efciencies gained from tuning the system over a longer period of time.

technique by over half the survey responders; however, high false positive rates are typically generated when attempting to detect undeclared links in structured and unstructured (e.g., narrative elds) transaction data, primarily due to data quality issues. Delving into more detail, the top three rules or scenarios deemed to be most effective from the six scenarios offered in the survey are: 1. Cash or cash equivalent scenarios 2. Rapid movement of funds 3. Activity in high risk jurisdictions Other scenarios that were specically noted by survey responders as effective are: 1. Peer group based scenarios 2. Geographic based scenarios assessing location of transactions against location of accounts 3. Electronic fund movements (wires, ACH) Prior to review, the majority of responders risk ranked the alerts, linked them to other related alerts, and ltered the alerts to remove known false positives to improve overall efciency. More frequent alert tuning is also correlated with higher effectiveness of transaction monitoring. Data quality and false positives are noted as key challenges to producing effective alerts.

Transaction Monitoring and Alert Tuning Techniques

Survey responders noted that the techniques deemed to be most effective at producing meaningful alerts are: 1. Rules and scenarios (monitoring with rules and scenarios to detect known behaviors) 2. Dynamic proles (monitoring with historical proles of observed behavior) The techniques noted as least effective are static proles (monitoring against expected behavior) and link analysis (monitoring for hidden or undeclared relationships). Link analysis is employed as a transaction monitoring

Current and Ongoing Costs/Overall Satisfaction

Upfront and ongoing costs are key considerations in selecting a transaction monitoring system. In 2010, 65% of survey responders will spend less than $1M on their transaction monitoring systems. There is no apparent correlation between the age of a system (i.e., how long ago the system was originally implemented) and the planned amount of spend. In general, the nancial institutions that only use a vendor system to perform transaction monitoring plan to spend less in 2010 than those that use a combination of systems.

Despite the majority of survey responders reporting less than 10% effectiveness of their systems, 75% of survey responders are at least somewhat satised with their system. Only 25% are dissatised. Most responders are quite satised. Interestingly, although 75% of survey responders are at least somewhat satised with their current systems, 46% of survey responders expect a major upgrade or replacement of their transaction monitoring system within the next two years. .

Implementation Considerations and Strategies

The survey questions probed implementation strategies and challenges facing nancial institutions when selecting an approach to implement a transaction monitoring system. This is often an expensive and challenging component of an AML program, and there are many vendors in the market that offer solutions that aim to address these complexities. Questions addressed the types of systems that are being used, what criteria impacted these decisions, and how these systems addressed multiple lines of business and jurisdictions for transaction monitoring.

Implementation Considerations and Strategies

Is your transaction monitoring system purchased from a vendor or developed in-house?

Highlights
The majority of responders (64%) indicated that their organizations have implemented a vendor purchased system, while only 2% of responders still relied on manual methods to perform transaction monitoring.
Manual methods 2%

Combination of both 23%

Observations
The software market for AML transaction monitoring is reaching a level of maturity now that the majority of nancial institutions opt to rely on purchasing the functionality offered by these platforms. Typically, the scope and scale of monitoring that is required today to satisfy current risk tolerances and regulatory requirements make it difcult to rely on manual methods alone. The results indicate, however, that vendor software does not yet offer a comprehensive platform to address all transaction monitoring needs.
In-house developed 11% Vendor purchased 64%

What factors drive decisions for choosing vendor vs. in-house systems?
Highlights
70% of responders indicated that vendor solutions are most appropriate when considering the systems credibility with regulators. 60% of responders voted for in-house developed solutions when considering the upfront and maintenance costs.
Survey response
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Vendor Supplied No Difference In House Developed

21%

23% 37% 40% 49% 57% 69%

16%

16%

Observations
These results are atypical of vendor selection criteria where typically software customers chose vendors based primarily on their ability to meet requirements, the effectiveness of solution to meet those needs, and the speed of implementation. Clearly the regulatory credibility criteria overrules other factors in the selection process.

41% 63% 61%

33% 35% 27% 23%

22%

27% 16% 16% 8%

Upfront Maintenance Ability to cost cost meet requirements

Ease Speed of use and ease of implementation

Effectiveness Credibility of solution with regulators

Decision factors

Implementation Considerations and Strategies

Do you have a dedicated data warehouse or technology hub which feeds your transaction monitoring system?
Highlights
The majority of responders (88%) indicated that their organizations use a dedicated data warehouse or technology hub to feed the transaction monitoring system.

No 12%

Observations
Given the risk-guided need to monitor transactions across a broad array of products, clients, and jurisdictions, and the disparate and heterogeneous nature of nancial transaction processing platforms, most AML transaction monitoring systems need the ability to pull transaction, account, and customer data from multiple systems. Operating and maintaining an AML transaction monitoring environment without a data hub to address data normalization and quality requirements would be extremely challenging.

Yes 88%

How has your organization implemented your transaction monitoring systems?

Highlights
75% of the responders implemented one transaction monitoring system and customized it for local business units while 25% of the responders implemented different systems to support all the transaction monitoring needs of the institution.
Different system 25%

Single system 64% Multiple instances one system 11%

Observations
The results support the fact that global nancial institutions typically implement one transaction monitoring system and customize it across geographies based on the perceived risk of its customers, geographies and products and services. In addition, these institutions typically create transaction monitoring hubs to address differences in legal matters (i.e., privacy, information sharing).

Effectiveness of Solution
The survey questions focused on the ability of the transaction monitoring systems to produce productive alerts. Productive means the alert generated was worthy of investigation, regardless of whether it resulted in the identication of suspicious behavior. The questions addressed how effective the system is, how effective the vendor platform is off the shelf, how robust the scenarios provided by vendor systems are, and how the factors and challenges impact the effectiveness of a transaction monitoring system.

Effectiveness of Solution

Within your organization, how effective is your vendor-purchased solution?

Highlights
64% of the responders require additional customization of their vendor-purchased solution.

Do not use vendor solutions 8% Offers effective off the shelf monitoring 12%

Observations
The results support the view that vendor-purchased solutions require additional customization based on the perceived AML risk of the nancial institution and the institutions unique geographies, product, and inherent risk. In addition, nancial institutions continuously look to improve the effectiveness of their monitoring systems to account for emerging AML typologies as well as changing risk prole of the institution.

Requires extensive customization 16%

Requires additional customization 64%

How effective are the scenarios provided with vendor-purchased transaction monitoring systems?
Highlights
46% of the responders nd that the scenarios provided by the vendor-purchased transaction monitoring systems provide adequate options to capture the institutions AML transaction monitoring needs.
50% 45% 40%

Survey response

35% 30% 25% 20% 15% 10% 5% 0% Very robust Reasonable Too generic Do not use vendor solution 10.0% 6.0% 46.0% 38.0%

Observations
One of the important aspects of selecting a transaction monitoring system includes the ability of the transaction system to offer the necessary AML typologies based on the institutions AML risk prole through the scenarios. These scenarios then are typically tuned further to improve the effectiveness of the institutions money laundering detection processes.

Factors affecting productive alerts

Effectiveness of Solution

Of the total alerts raised by your transaction monitoring systems, what percent would you estimate to be productive?
Highlights
The average productivity rate among responders was 24%. Upon further examination, it is noted that most responders are far below that average, with more than half estimating that their transaction monitoring systems generate 10% or less productive alerts. Even more telling is the high number of responders who estimated their productivity rate at 5% or less. Of these responses, the majority of the answers are below 5%, indicating that many people are receiving very low productivity from their transaction monitoring systems.
45% 40% 35%
Total

Survey response

30% 25% 20% 15% 10% 5% 0%

Observations
While transaction monitoring systems have been on the market and deployed at nancial institutions for many years, generating productive alerts and minimizing false positives remain a challenge for many companies. Though the reasons for unproductive alerts could vary widely, common factors could include data quality issues, improper scenarios, invalid thresholds or incorrect procedures. As nancial institutions improve and mature their compliance functions and systems, it will be imperative for nancial institutions to benchmark and gauge their productivity rates to save time and money and improve the overall effectiveness of their monitoring program.

10

15

20

25

30

35

40

45

50

55

60

65

70

Productive alert percentage

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Effectiveness of Solution

Please rate the following ve factors in generating productive alerts from your transaction monitoring system (see chart).
Very important

Highlights
Of the various factors needed to generate productive alerts, responders felt that data quality and proper or relevant scenarios are the most important factors in generating productive alerts from a transaction monitoring system. The other factors (properly tuning scenario thresholds, incorporating feedback from alert investigations, and suitability of solution) are deemed important, but are not as highly valued as having good data quality and proper scenarios.
Survey response

Important Average Not important

100% 90% 80% 70% 60%

86% 43% 51% 53% 65%

50% 40% 30% 20%

35% 31% 41% 31% 18% 4% 8% 16% 4% 14%

Observations
With nancial institutions striving to improve the effectiveness of their transaction monitoring solutions, this response seems to indicate that nancial institutions could benet by investing efforts upfront to identify and remediate data issues and by taking a considerate, comprehensive approach in selecting scenarios which are appropriate for the types of jurisdictions, customers, and products that the nancial institution supports.

10% 0%

Suitability of Properly Feedback solution for tuned scenario from my business thresholds investigation lines and of alerts products

Proper or relevant scenarios

Data quality

How effective are the scenarios?

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Effectiveness of Solution

Estimate what percentage of your meaningful investigations into potential money laundering is identied by the following sources (see chart).
Highlights
Approximately half of the meaningful investigations are detected by transaction monitoring systems. Manual referrals and customer on-boarding reviews also yield meaningful investigations, but not of the scale of transaction monitoring.

Transaction monitoring 51.47%

Manual referral of suspicious activity 34.39%

Observations
While transaction monitoring systems generate the majority of meaningful alerts, it will continue to be imperative for nancial institutions to integrate and consider alerts from all sources during investigations.

Customer on-boarding review and controls 14.14%

Please rate the following challenges in relation to operating an effective transaction monitoring system.
Slightly

Highlights
Most responders consider access to data, data quality and false positives as major challenges to operating an effective transaction monitoring system. Ongoing system costs and ease of use seem to be of lesser concern for the responders.
Survey response

Somewhat Moderately Very

100% 90% 80%

23% 13% 14% 15% 18% 20% 35% 50% 31% 23% 31% 20% 20% 19% 25% 16% 20% 43% 29% 29% 29% 23%

70%

Observations
Operating an effective transaction monitoring system can be challenging with constant pressure to identify meaningful suspicious activity while controlling costs and coping with poor data quality or improper system or threshold setups. Firms must often balance and allocate resources according to highest risk areas and priorities in order to strike a proper balance between identifying suspicious behavior and operating an efcient and sustainable program.

39%

60% 50% 40% 30% 20% 10% 0% Data access Vendor support Current or ongoing systems cost
39% 33% 22% 10%

11%

Scalability False Ease of and positives use and mainte- customization to your nance businesses

Data quality

Challenge to operating effective system

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Effectiveness of Solution

The most common hurdles seem related to the accessibility and quality of data. If the data needed for transaction monitoring is not available or is of poor quality, the results from the solution will often be poor. It is important for nancial institutions to consider remediating the data and developing ongoing processes and capabilities to identify and x issues on an ongoing basis. Other factors such as current or ongoing systems cost, vendor support, ease of use and maintenance, and scalability and customization to business are considered less challenging by survey responders, which seems to indicate that nancial institutions are able to cope with these challenges more readily than the data quality issues that can plague an effective transaction monitoring system.

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Transaction Monitoring and Alert Tuning Techniques

The survey endeavored to address the techniques used by nancial institutions to detect money laundering. This encompassed, at a high level, the techniques typically offered by vendors in this space, the effectiveness of different rules and scenarios used to detect money laundering, the techniques used to more effectively dispose the alerts, and the frequency and effectiveness of alert tuning.

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Transaction Monitoring and Alert Tuning Techniques

What techniques does your organization employ to support transaction monitoring?

Highlights
Over half of the survey responders used rules, dynamic proles, population or peer groups, and link analysis as techniques to perform transaction monitoring. Rules and scenarios is the most popular technique used, and static proles the least popular technique.
100% 90% 80%

Survey response

70% 60% 50% 40% 69.2% 30% 20% 10% 0% Rules and scenarios Static profiles Dynamic Population Link analysis (monitoring profiles or peer (hidden or against (monitoring groups undeclared expected against actual (similar relationships) behavior) behavior) behavior) 46.2% 57.7% 51.9% 96.2%

Observations
Employing rules and scenarios is the most popular technique for identifying known money laundering patterns. Dynamic proles are useful in identifying unusual activity, and possibly identifying previously unidentied techniques for money laundering not already covered by rules and scenarios. Population or peer groups provide the ability to identify outliers when investigating behavior of individual accounts when compared to groups of similar accounts, and link analysis can be used to identify hidden or undeclared relationships. These two techniques are important when attempting to identify unusual relationships, but rely on high data quality and active management of reference data to reduce the volume of false positives typically generated with these techniques. Static proles can also be useful when monitoring accounts with low volumes of transactional behavior (when it becomes difcult to build statistical models based on actual behavior), but also require frequent maintenance and tuning to prevent high false positive alerts from being generated.

Technique

Do you adjust the scope and scale of transaction monitoring based on the perceived risk of the following factors (see chart)?
Highlights
Over three-quarters of survey responders adjusted the scope and scale of their transaction monitoring based on the ve factors of perceived risk presented. All of the ve factors were considered and incorporated by

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Transaction Monitoring and Alert Tuning Techniques

over 70% of the survey responders, with the types of transactions ranked highest and the line of business ranked lowest.

No Yes

100%
12% 10% 22%

6%

12%

90%

Observations
Clearly, transaction monitoring must be taken into context along with other risk factors. Most transaction monitoring solutions allow these risk factors to be incorporated into their platforms, whether it be through the types of rules they implement to focus on specic risk factors, the approach they use to weight and score unusual behavior by these risk factors, or incorporating perceived risk into the way alerts are prioritized for investigation.
Survey response

80% 70% 60% 50%

88% 90% 78% 94% 88%

40% 30% 20% 10% 0% Customers

Line of Business

Products

Types of Transactions

Geography

How are alerts from your transaction monitoring solution evaluated prior to investigation?
Highlights
At least 80% of survey responders performed additional evaluation on their transaction monitoring alerts prior to investigation. Over half the survey responders risk ranked alerts prior to investigation and just under half combined alerts prior to investigation.
60%

50%

Survey response

40%

Observations
Financial institutions endeavor to increase the efciency and effectiveness of alert review through initial, manual intervention. As systems are implemented and alerts are continuously generated on daily, weekly, and monthly cycles, strategies have emerged to cope with the inevitable backlog of alerts that require investigation. Adopting a risk based approach to the investigation focuses research on the highest impact alerts, but may not sufciently reduce backlogs. Combining related alerts (e.g., alerts on the same customer over different time periods, or combining alerts for the same set of transactions but generated by different aspects of a risk and compliance program) may prevent duplicative work efforts. Employing techniques to prevent the re-alerting of known acceptable behavior allows nancial institutions to focus their efforts on potentially more effective alerts.
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30%

56.9% 45.1% 39.2%

20%

10%

17.6%

0% Alerts are risk ranked for investigation Various related alerts are combined and linked prior to investigation Alerts are separately "filtered" to remove known false positives Alerts are investigated as received with no additional evaluation

Alert evaluation technique

Transaction Monitoring and Alert Tuning Techniques

Please score the effectiveness of each of the following scenario types for identifying suspicious activity related to money laundering?
Highlights
Cash scenarios and other scenarios are deemed by over three quarters of survey responders to be the most effective scenarios. Early withdrawal and hidden relationships are deemed by 20% of responders to be the least effective. The other scenarios described and deemed to be most effective are:
Survey response
Least Effective Average Effective Most Effective

100% 90% 80% 70% 60%

20% 24% 20% 15% 14% 25% 20% 18% 20%

35% 20% 12%

16%

1. Unusual activity when compared to the peer group 2. Quick pay down or early settlement of loans 3. Segregation between location of transactional activity, location of accounts, location of incorporation or place of business, and use of offshore shells, plus high risk jurisdiction for cash movements

50% 40% 30% 20% 10% 0% Identification Early Rapid Cash or Activity in Changes in and withdrawal, movement high risk behavior cash monitoring disregard of funds jurisdictions equivalent of hidden for fees movements relationships and structuring Other
57% 71% 69% 61% 78% 77%

33%

Observations
Rules or scenarios that capture well established, known money laundering scenarios are generally the most effective cash or cash equivalent movements and structuring and activity in high risk jurisdiction. The effectiveness of other scenario types such as link analysis or change in behavior scenario types may be compromised by data quality and false positive issues.

Scenario

How frequently do you tune (i.e., adjust scenarios, modify thresholds) your transaction monitoring system?
Highlights
Alert tuning is an integral component of AML transaction monitoring systems; over 88% of survey responders tune their systems at least once a year. 51% of the survey responders tune their systems at least quarterly, and 31% of responders tune their systems at least every month.

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Transaction Monitoring and Alert Tuning Techniques

Only upon initial system implementation 7.8%

Observations
Transaction monitoring systems need to be tuned to stay current with an ever changing risk environment. Some nancial institutions have established positive feedback mechanisms, where the characteristics of useful alerts are fed back into the system to improve the effectiveness of the system. Responders that tuned their systems more frequently correlated with both improved effectiveness of the system and also with higher ongoing costs. Many nancial institutions have full-time resources dedicated to tuning these systems following the initial implementation.

System has never been tuned 3.9%

Every month or nearly continuously 31.4% Annually 37.3% Quarterly 19.6%

To what extent has tuning improved the quality of alerts from your transaction monitoring system?
Highlights
All survey responders reported that alert tuning improved the quality of alerts produced by their transaction monitoring systems, with over 35% of responders reporting substantial improvements.
40% 35% 30%

Survey response

25% 20% 15% 10% 5% 0% Did not improve Mildly improved Moderately improved Substantially improved 31.3% 31.3% 37.5%

Observations
Alert tuning is a vital component of maintaining an effective AML transaction monitoring system. Responders reported substantial improvements regardless as to whether the effective measure of the system was low (less than 10%) or high (greater than 50%). In addition, there is a strong correlation between responders who report that tuning substantially improved the quality of alerts and responders who report they tune their system monthly or continuously. The same is true of responders who reported tuning mildly improved their system and responders who reported they tune annually. .

Level of improvement

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Current and Ongoing Costs/Overall Satisfaction

The survey asked participants about costs and factors affecting costs with respect to their transaction monitoring system. This included any potential sharing of costs that can be done within the AML program and outside the AML program, the actual planned spend for 2010, the amount of planned spend on alert tuning and system maintenance, the age of the system, and any plans for future upgrades of the system.

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Current and Ongoing Costs/Overall Satisfaction

In what other functions do you use the data gathered for your transaction monitoring solution?
Highlights
50% of the nancial institutions used the data gathered for transaction monitoring to assist with other compliance and surveillance needs. Approximately 10% found uses for the data for Marketing and Finance functions. 20% of the responders used the data exclusively for AML transaction monitoring.
70% 60%

Survey response

50%

40% 59.6% 51.9% 51.9% 57.7% 23.1% 13.5% 9.6% Finance None of the above

30%

Observations
While the investment made in a transaction monitoring system may provide other benets within an AML program, the specic nature of AML transaction monitoring systems does not offer or leverage signicant benets outside of a compliance function. AML systems appear to be customized solutions to satisfy a single set of risk and regulatory requirements, rather than provide broader benets across the organization.

20%

10%

0% Customer fraud monitoring Employee monitoring Know Your Customer (KYC) profiling Marketing

Use in other functions

How much in US$ does your organization anticipate spending in 2010 related to transaction monitoring?
Highlights
Approximately 70% of nancial institutions plan to spend less than $1M on their transaction monitoring systems in 2010.
50% 45% 40%

Survey response

35% 30% 25% 20% 15% 10% 5% 0% $0 $500K $500K $1M $1M $5M Greater than $5M 22.4% 24.5% 46.9%

Observations
There is no signicant correlation between the amount of planned spend on the system and 1) the effectiveness of the system, 2) the overall satisfaction with the system or 3) the age of the system. Signicant investment is required to implement new transaction monitoring systems, and also to upgrade transaction monitoring systems. Large nancial institutions may have signicant expenditure in stafng to investigate the high volume of alert output, especially in systems with low overall effectiveness.

6.1%

Anticipated spend 2010

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Current and Ongoing Costs/Overall Satisfaction

After the initial installation, what percent of your total AML program budget (e.g., technology, operations, staff) do you expect to spend on system maintenance and alert tuning?
Highlights
86% of respondents expect to spend less than 25% of the total AML program budget on system maintenance and alert tuning, with only one institution expecting to spend more than 50%. There is no signicant correlation between the planned spending on maintenance and tuning and 1) the age of the system or 2) the type of the system.
Survey response

70%

60%

50%

40% 58.0%

30%

20% 28.0% 10% 12.0% 0% Up to 5% 6% 25% 26% 50% Greater than 50% 2.0%

Observations
It is evident that there is a balance to strike in budgeting for the AML program between maintaining and improving the transaction monitoring system over time. This balance may change depending on where in the implementation lifecycle the nancial institution is, with potentially heavier allocation of budget to maintenance costs on recently installed systems that may subsequently be pared down and reallocated to alert tuning over time.

Spend on system maintenance and alert tuning

When did you initially deploy your transaction monitoring system?

Highlights
Less than 20% of responders have deployed their transaction monitoring system within the last two years. One in four deployed their transaction monitoring system more than ve years ago.
Have not deployed or plan to deploy in future 2%

1 year ago 14%

More than 5 years ago 25%

Observations
AML transaction monitoring systems are now predominantly established in most nancial institutions. The chart illustrates the increasing adoption of these systems over the past decade. Interestingly, the rate of new systems is now dropping off, with the majority of responders have initially installed two to three years ago.
2 3 years ago 38% 4 5 years ago 21%

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Current and Ongoing Costs/Overall Satisfaction

Following the initial deployment, nancial institutions look to increase the scope of coverage of transaction monitoring, to improve the detection functions and techniques of these systems, and to improve the overall effectiveness of these platforms.

Do you expect a major upgrade or replacement of your transaction monitoring system within the next two years?
Highlights
Nearly half of the survey responders expect a major upgrade or replacement of their transaction monitoring system within the next two years.
Not yet determined 19.2% Yes 46.2%

Observations
Financial institutions need to continue to upgrade and replace their systems to meet their regulatory AML transaction monitoring requirements. In addition, mergers and acquisitions in the nancial services industry in the last few years may have also put existing platforms under stress that necessitate upgrade or complete replacement. Vendor deciencies and/or vendor new features (such as link analysis, integrated case management) may also be driving upgrade plans.
No 34.6%

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Current and Ongoing Costs/Overall Satisfaction

How satised were you with the overall effectiveness and value of your transaction monitoring solution(s)?
Survey response

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Very dissatisfied Mildly dissatisfied Somewhat satisfied Quite satisfied Very satisfied 7.7% 17.3% 44.2%

Highlights
75% of survey responders are satised with their transaction monitoring solutions.

Observations
Even as the majority of survey responders are satised with their current solution(s), most are still anticipating an upgrade or system replacement in the next two years. This may be reective of the increased capabilities being offered in the most recent vendor offerings. .

15.4%

15.4%

Satisfaction rating

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Key Contacts
For additional information about the results of ACAMS and Ernst & Youngs Global AML Insight Series, please contact:

ACAMS
John Byrne Executive Vice President jbyrne@acams.org +1 703 282 4954

Ernst & Young LLP

Steven Beattie Principal Financial Services +1 212 773 6378 steven.beattie@ey.com

Ernst & Young LLP

John Sabatini Principal Financial Services john.sabatini@ey.com +1 212 773 0619

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About Ernst & Young LLP

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member rms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

About ACAMS
The Association of Certied Anti-Money Laundering Specialists (ACAMS) is the premier organization for anti-money laundering (AML) professionals and the provider of the Certied Anti-Money Laundering Specialist (CAMS) credential the most respected certication in the industry. The mission of ACAMS is to advance the professional knowledge, skills and experience of those dedicated to the detection and prevention of money laundering around the world, and to promote the development and implementation of sound anti-money laundering policies and procedures. For more information, please visit www.acams.org