The biggest compliance mistakes in AML, and how to avoid them
Even the most experienced AML professionals can get it wrong. In Strise's Anti-Money Laundering Megaminds Report, experts highlight five common missteps that continue to expose institutions to risk. Here’s what to watch for, and how to fix it.
1. Insufficient background checks and KYC/KYB processes
Failure to conduct thorough Know Your Customer (KYC) and Know Your Business (KYB) checks is a top weakness. Many institutions gather incomplete or outdated customer data, missing risk indicators. There’s often too much focus on onboarding, with less attention on continuous monitoring.
“It’s not just about checking a name against a list; it’s about understanding the customer’s entire profile and the context of their activities. Failing to do so is like welcoming a wolf into the fold.”
2. Inadequate due diligence on third parties
AML compliance often overlooks vendors. Without verifying third-party compliance with AML standards, banks risk exposure through supply chains and outsourced services.
3. Poor data quality and lack of integration
Fragmented data systems are another major issue. When financial institutions rely on siloed or incomplete information, it becomes difficult to track patterns, detect anomalies, or respond quickly to risks.
4. Over-reliance on manual processes
Many teams still rely heavily on spreadsheets and manual reviews. This slows down investigations and increases the risk of error or oversight. Experts recommend embracing automation and intelligent tooling to reduce false positives and manage alerts effectively.
5. Failing to build a culture of compliance
Compliance must be supported by leadership and built into the organisation’s DNA. Without visible leadership support, continuous training, and clear communication channels, compliance remains performative and siloed.
Takeaway
Fixing AML isn’t only about technology. It requires clean data, strong leadership, and continuous investment in training and processes. By avoiding these five common compliance errors, financial institutions can build stronger defences and better meet evolving regulatory expectations.
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