Building or Partnering Up: A Guide to Choosing Your AML Compliance Solution

When it comes to cost, the difference is often crystal clear. Setting up in-house compliance demands significant upfront capital for hiring AML experts, acquiring specialized software, and establishing processes, all compounded by ongoing training. 

In contrast, partnered compliance typically offers a more budget-friendly solution, particularly for smaller to mid-sized businesses. This is because it eliminates the need for heavy infrastructure investments, as external providers already possess the necessary systems and staff.

Now, let’s take a look at how organizations work with external providers to support their compliance operations and how these services function in practice.

Beyond financial benefits, another differentiator lies in control over your compliance program and its adaptability to regulatory changes. 

In-house compliance provides full autonomy, making you responsible for the AML program’s framework, implementation, and ongoing maintenance. Your team’s speed and capacity will directly dictate your ability to adapt to new regulations.

With partnered compliance, while you can request customizations, the service provider handles the setup. The key benefit is their responsibility for staying current with regulatory updates and adapting quickly, as this is their core business.

At the heart of successful AML programs lies technical expertise—an area that is constantly evolving and requires continuous attention. How you sustain your team’s high level of knowledge is a defining factor in your AML compliance resilience. 

For in-house compliance, you bear the responsibility of finding, retaining, and consistently training personnel with the necessary technical knowledge. A gap in your team’s knowledge or training can immediately affect your current compliance program.

However, with partnered compliance, external service providers that specialize in AML compliance typically stay updated on global regulations and have the expertise needed in different areas such as Customer Due Diligence (CDD), and transaction monitoring.

As your business grows, scalability becomes another critical factor and raises the question of which compliance option can easily expand alongside it. Scaling your in-house AML compliance team may entail significant effort and investment in recruiting, onboarding, and training new members.

External providers excel in this regard; they can scale their services to match your business growth and adapt to changing regulations far more rapidly.

Understanding the differences between in-house and partnered AML compliance is the first step. This comparison across cost, control, expertise, and scalability should give you a clearer picture of what each approach to AML compliance entails. Making an informed choice can position your company to not only navigate but also thrive amidst the constantly changing regulatory environment.

1. Internal Resource Planning and Preparation

Before engaging with a client, the partnered AML compliance provider must ensure that they have the necessary internal resources and structures in place.

• Assess Capacity: Determine the current workload and availability of AML analysts, compliance officers, and other relevant personnel.
• Prepare Documentation: Ready service level agreements, non-disclosure agreements, and any other necessary documents to formalize the partnership and ensure that all parties are protected.
• Training and Expertise: Ensure the team is fully trained on the latest AML regulations, best practices, and any new technologies.

2. Identification of Client Needs and Expectations

An initial meeting is crucial for understanding a client’s specific needs and expectations, and establishing a collaborative relationship.

• Understand Client’s Business: Gain a comprehensive understanding of the client’s business model, customer base, geographical reach, and the types of transactions they handle. 
• Identify Specific Compliance Needs: Discuss the client’s current challenges, pain points, and what aspects of AML compliance they wish to receive operational support for.
• Data Storage Software: Identify the client’s existing data storage solutions and determine whether they require the usage of a different data storage software or integration with their current systems.

3. Dry Run of Processes and Calibration

Before full deployment, a dry run allows for testing, refinement, and providing expert consultancy to the client.

• Shared Resources Creation: Establish shared platforms, communication channels, and documentation repositories that will be used throughout the compliance support process.
• Delegated Work Testing: Conduct a dry run using a limited set of the client’s data, allowing verification of the effectiveness of screening and monitoring systems, identifying bottlenecks, and ensuring seamless integration to existing systems (if applicable).
• Review of Processes and Output: Present insights from the dry run and obtain feedback or formal client approval on the proposed processes and workflows.

4. Go Live

Once preparations and approvals are in place, the partnered AML compliance support can now go live.

• Full Implementation: Begin full-scale operation of the AML compliance support services as agreed upon.
• Continuous Monitoring and Optimization: Continuously monitor the effectiveness of the partnered services, identify areas for further optimization, and adapt to evolving regulatory requirements.
• Regular Communication and Reporting: Maintain regular communication with the client, providing agreed-upon reports on AML activities, alerts, and any significant findings.