How Banks Can Easily Right-Size Their AML and KYC Teams

WorkFusion partnered with 1LoD on their inaugural Financial Crime Benchmarking Survey & Report. The report provides valuable insight into how leading global banks are managing AML and KYC challenges in four areas:

1. Operating model
2. Staffing roles and responsibilities
3. Technology
4. Oversight/Budget /Resources

The report is chock-full of helpful data that reveal where AML and KYC program leaders see their biggest challenges and the ways in which they are responding to them. For example, 94 percent of banks identify manual workloads as a key operating challenge in AML/KYC, and 80 percent say that technology is the area of AML/KYC that requires the most financial investment.

One salient point that will stick in the mind of nearly every reader is the notion of how to focus on right-sizing AML/KYC teams. According to the report, “Right-sizing risk and compliance functions is more art than science. Regulators are not much help here because they tend to fall back on generalizations about appropriateness and the suitability of any function relative to the size and complexity of an institution’s business.”

What if the need to right-size simply went away?

This is a major promise of AI – and it can have a huge positive impact.

Just think of how AI obviates the need for right-sizing a compliance team. AI is, in fact, the ultimate technology for flexibly scaling your compliance operations. Compliance leaders do not want to continuously grow and shrink their operations staff. Yet, they are often forced to do so – for four key reasons:

1. Alert surges: Since 2022, the United States has continuously imposed new sanctions on Russia and other nations, such as China, Iran and others as well as secondary sanctions on highly targeted actors, such as specific companies.
2. Staff turnover: The role of an L1 analyst is not very stable. In fact, some banks suffer 100 percent turnover in their L1 analyst ranks each year. The highly repetitive nature of the work (as well as recurring alert surges) leads to job burnout and high turnover which banks have rarely been able to quell. Many FIs frequently have unfilled AML and sanctions analyst positions for months at a time. And once they find people to fill open roles, they must onboard, train (and often re-train) the new analysts in a process that can take months to bring them up to speed.
3. Government enforcement actions: Banks and FIs that have received a government enforcement action (or notice of an impending action) often find themselves in the position of having to scramble fast to modernize their AML and sanctions compliance programs. In many cases, the amounts of change and improvement required are simply too much to accomplish both at scale and at a consistent level of performance.
4. Growth in customer base or increased KYC: Organizations that experience growth spurts in their customer base and/or resolve to perform more frequent KYC checks suddenly need more operational scale.

This is where AI that is specifically designed for AML and KYC processes can alleviate organizational strain – often within just weeks. Pre-built AI solutions, known as AI Agents, perform specific AML and KYC job roles and give any FI the ability to “hire” AI that works 24/7/365. This is a game changer for compliance programs. It resolves staffing challenges by improving quality, rapidly scaling, and increasing team capacity.

Moreover, hiring (or implementing) AI in these areas allows a bank to quickly show regulators that they are addressing any compliance shortfalls with proven, innovative technology. In the case of WorkFusion AI Agents, 10 of the top 20 US banks rely on them for flexibly scaling AML/KYC ops. The ‘proven in the field’ nature of these AI Agents translates into more immediate acceptance by regulators. Not only that, but the approval is also more permanent as the AI Agents consistently perform – and improve in – their job roles by leveraging built-in machine learning capabilities.

Banks are committed to getting AML/KYC right

Despite overall compliance budgets having been tightened for banks of all sizes, that is not the case for AML/KYC operations. And with a large focus on getting these areas right, 80 percent of banks say that AML/KYC technology purchases are key to doing the job correctly – meaning, to identify risks in a timely manner and operate within the acceptable regulatory frameworks put in place by governments and regulatory bodies worldwide.

This benchmarking survey and report provides crucial insight for compliance leaders navigating the evolving landscape of financial crime compliance in an industry on the edge of transformation.

Read the full report here.