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How cash visibility can combat money laundering

Money visibility solutions can help banks and businesses combat money laundering.

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November 15, 2024 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator

Cash laundering is an omnipresent issue in the financial services industry. Bad actors utilize cash to hide illegal activities ranging from drugs to human trafficking and more. How can bank deliver effective anti-money laundering tools?

Luke Curry, senior consultant at CMS Analytics discussed how cash visibility can address AML in a session at Cash in the US on Oct. 22 in Nashville, Tennessee.

He pointed out that money laundering makes up 2.5% of global GDP, equally $780 billion to $2.04 trillion. In the U.S., $300 billion is laundered annually.

The U.S. sees a higher number due to being a global financial hub, and "the dollar being the reserve currency attracts bad actors," Curry said.

As regulations around AML have increased, banks need more staff to deal with it. However, Curry said that "35% of banks said that a lack of skill with technology impedes AML" technology integrations.

In response to this, many banks rely on the micro individual level to detect money laundering. However, Curry said this often doesn't work as it typically relies on older solutions that require regular updates that are carried out manually. This in turn raises the risk of error and false positives.

Instead, he said banks should address a more robust macro level of cash visibility to address money laundering.

One example is building a demand profile that analyzes how cash is used historically at a business, on a site-by-site basis. These profiles look at historic trends of cash coming in over time.

From there, you can identify anomalies. Curry gave an example of how more cash was brought in for a business on a Friday the first day of the month that surpassed the normal amount of cash brought in. This then flagged the system as a potential money laundering event.

This data can then be looked at more broadly on a geographical area. Curry shared a map of various locations marked with yellow flags and red flags, representing potential money laundering events.

"Locations marked in yellow have been flagged once and red ones have been flagged multiple times," Curry said.

From this data, businesses and banks can identify areas that may see wider criminal activity. Then when those repeat areas see another event, the system can flag the potential money laundering and raise it up on the priority list for potential investigations.

Lastly, banks can integrate this data into the retail network and into the wider AML strategy.

Banks could, "produce a daily report with a list of all the flags, locations, number of flags and probability of that flag being money laundering," Curry said.

From this data, they can feed it into a micro analysis for individual locations and in turn use it investigations.

This can help the bank in multiple ways. First, it can increase staff productivity by saving them time since they could focus on impactful data. Second, they can then use that data to more effectively combat violations. It also can help reduce the number of false positives that can drain resources.

Ultimately, it takes a multifaceted approach to combat money laundering that takes a look at overall trends, not one event or data point.

About Bradley Cooper

Bradley Cooper is the editor of ATM Marketplace and Food Truck Operator. He was previously the editor of Digital Signage Today. His background is in information technology, advertising, and writing.

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