New security solution effective for African banks

Technology solutions providers Mint Management Technologies and Microsoft are finalising the first version of an anti-money-laundering (AML) solution to help protect African financial institutions from illegal activities without enforcing cumbersome administration processes on clients.

“AML initiatives are essential for ensuring that the wealth created in African countries is used to transform the lives of African people. While each country’s commitment to AML varies, countries are finding it increasingly difficult to participate in the global economy if they are not engaged in some form of AML programme, providing some incentive for banks to support strong regulatory initiatives that align with global AML standards,” says Mint Management Technologies senior client lead Ross Musselman.

He notes that African banks are not specifically targeted for criminal attacks – with financial institutions in the UK, Australia, Belgium and the Netherlands being among the top targets. However, the continent is not immune to threats of this nature, and the extent of the problem is often difficult to gauge, owing to the difficulty of exposing and policing such activities in Africa. This difficulty in detection is further compounded in the case of multinational organisations that extract wealth out of developing countries through price transfer programmes.

It is imperative that African banks implement remediation projects to ensure AML and know-your-customer compliance – or risk expensive fines and reputation damage. Musselman notes that AML solutions are being implemented widely in South Africa and are starting to take hold in other African countries as banks start to feel the pressure from regulators to comply.

The problem is that compliance with AML regulations often forces banks to put more pressure on clients to comply with the administrative requirements associated with regulations, such as the Financial Intelligence Centre Act, or have their accounts frozen, and this can lead to customer attrition. Far from simply being arduous, these requirements can prove truly problematic for individuals who, for example, derive an income from the informal sector and cannot produce formal payslips or proof of residence.

“One of the critical problems for individual banks is that they are likely to struggle if they must combat criminality on their own. If one bank has an AML programme while other banks in the market do not, that bank is likely to lose clients and its subsequently comparatively weak capital stores will render it difficult to compete with the other banks.”

To address this problem, Mint and Microsoft are in the final stages of developing a solution that provides the core technology elements of an AML solution, but that does not dictate the documentation requirements needed from banking clients. “This makes the solution uniquely flexible – meeting a diverse set of regulatory requirements, wherever the financial services company finds itself.”

Core technical elements of the solution – derived from Mint’s 16 years of experience in AML solutions – include remediation process management, auditing, a client compliance portal and reporting in its initial version. It also provides a robust architecture that supports more advanced features. Some of the features in the solution roadmap include a rules engine with a risk-based overlay and an artificial intelligence-based transaction tracking component, as well as configurable third-party integrations.

Mint and Microsoft will seek to partner with financial institutions to ensure that the technology is tailored to adhere to the regulations governing banking activities in each country where it is implemented.

“Financial institutions know the regulatory environment in which they operate better than we ever will and our clients will bring this to the solution when we partner with them. This enables the client to quickly create the unified view of their customers that should drive better return on investment in their customer engagement strategy,” says Musselman.

The first version of Mint and Microsoft’s AML solution is expected to be available by the end of the year.