Summary

When a leading Bank faced challenges with its proprietary AML tool, including incurring high costs and encountering excessive false positives, it turned to WBP to build an in-house solution that meets compliance standards, delivers increased operational efficiency, and lowers costs. Here’s how we did it, and how you can too.

The Challenge: High Costs, Limited Control, and the Shortcomings of Traditional AML Solutions

Mid-tier banks and fintech companies face an array of challenges with their proprietary anti-money laundering (AML) solutions. From considerable license overheads, including being locked into extended contracts with high fees, to long and unpredictable update cycles where even minor changes require vendor tickets that can take weeks to be addressed. 

This results in banks not being able to react swiftly to new regional regulatory changes and compliance demands, leading to an increase of missed alerts and false positives. 

These factors often result in companies exploring developing their own custom AML tool, but with limited technical resources, including small data science departments, the lack of internal know-how often seems like a major barrier to realizing such a goal.

Building a Custom Anti-Money Laundering (AML) Solution 

Our client, a leading fintech company operating internationally, decided that the chronic AML issues it faced could not be rectified with a vendor change or license upgrade and they decided to pursue a custom AML solution that would lower costs, increase oversight, and deliver operational autonomy. 

Research-First Approach

To assess the requirements and scope of a custom AML solution, the bank began a thorough research phase that involved interviews with Compliance Officers and MLROs, gaining valuable insights about missed alerts, cultural gaps, and region-specific compliance demands and risk profiles. 

Additionally, the bank undertook a robust cloud architecture assessment, confirming that its established Azure or AWS setup was able to reliably run AI-powered AML monitoring. 

Finally, given the bank’s limited in-house technical resources, it was essential that minimal-code ML prototypes were validated, confirming that small, containerized services could ingest transactions, detect anomalies, and route alerts in real time, all within existing cloud systems.

Objective: Launch a pilot-ready AML solution in approximately six months

To achieve this goal, the bank devised a plan that would enable it to have a running pilot version of the in-house AML tool ready in roughly six months in order to avoid a lengthy external procurement process. This would be a gradual procedure that involved several key steps. 

Step 1: Targeted Discovery & Feasibility 

• Interviews with IT stakeholders to identify the top AML pain points, including false positives and slow vendor updates. 

• Confirmed that the bank’s internal tech teams can manage minimal-code frameworks (TFX, PyTorch Lightning) and containerization tools (Azure Kubernetes Service, AWS ECS).

• Timeline setting with clear milestones for the in-house AML tool with ongoing partial vendor support.

Step 2: Prototyping & Parallel Testing 

• Rollout of the new in-house solution on a higher-risk customer segment while the proprietary AML tool oversaw the remainder of the portfolio.

• Fine-tuning risk logic and adjusting thresholds through weekly check-ins.

• Improved ownership structure, where each alert was assigned a compliance officer.

  
  

“Tweaking thresholds in a single day—instead of waiting weeks for a vendor patch—proved our compliance can keep pace with local regulations.”
Senior AML Officer

Step 3: Full-Rollout and Operational Autonomy

• Once the pilot proved to be successful, within six months it had phased out older modules and began managing the bank’s full portfolio.

• Containerized microservices allow for increased adaptability, as teams can easily incorporate new watchlists and negative news feeds on the bank’s cloud platform.

• With the additional resources available from no longer paying vendor licenses, the bank was able to re-invest those funds into employee training on the new AML tool. 

Implementing an In-House AML Tool on Cloud Platforms 

One of the core aspects of the shift to a custom AML solution was the utilization of cloud platforms such as AWS ECS and Azure Kubernetes Service (AKS). These platforms reduce operational overhead and allow for easy container deployment, allowing for more scalable operations. 

Working with AWS ECS and AKS delivered important operational scalability, enabling the bank to add new microservices for advanced modules like automated KYC checks as its capacity grows.

The bank’s DevOps team had the necessary familiarity with container orchestration, as well as the know-how to manage minimal-code AML microservices for the approach to succeed. 

Compliance officers were provided a user-friendly dashboard for alert triage and threshold adjustments, and the in-house AML tool fostered a culture shift where staff were empowered to proactively handle daily AML logic changes without the need for external vendor tickets. 

Building an AML Tool with Limited Resources 

Instead of building sophisticated ML, the bank relied on prebuilt libraries and container templates. This enabled staff to achieve core AML tasks with minimal overhead. 

Additionally, the autonomy staff benefited from can’t be overstated. Instead of creating vendor tickets and incurring hidden fees with external AML solutions, local compliance officers can now update watchlists or anomaly rules daily on a scalable infrastructure that grows alongside the bank’s operations. 

Impact: Fewer False Positives, Enhanced Regulatory Alignment, and a Scalable AML Solution

The benefits of transitioning to a custom anti-money laundering tool were felt immediately. Some of the key metrics that reflect the impact include: 

• 30-50% fewer false positives: Reducing false positives allows compliance teams to zero in on genuine threats, boosting morale and efficiency. 

• Robust Compliance: Enhanced operational and regulatory alignment, ensuring compliance standards are met.

• Cost-effectiveness: Predictable costs, thanks to container-based services being integrated with existing systems, along with the shift away from vendor licenses. 

• Talent development: Vendor fee savings reallocated to training, fostering an agile, future-focused compliance mindset and culture of accountability. 

• Digital autonomy: The end of reliance on an external vendor reduces overhead and delivers scalability.

Conclusion: Building a Lasting AML Solution from Scratch

Through the combination of a research-driven approach, centered around stakeholder interviews, and leveraging the bank’s internal cloud services, the bank was able to generate a cost-effective and customizable AML tool that reacts in real-time and evolves to meet new threats. The decision to use ML and container orchestration increased short-term efficiency and delivered a solution that ensures long-term adaptability in a demanding regulatory climate.