Enriching financial crimes compliance for insurance clients

One of our life insurance and annuities clients was navigating several challenges in its financial crime compliance program in the absence of a robust, technology-enabled anti-money laundering (AML) monitoring program. Identifying suspicious behavior and money laundering trends among hundreds of thousands of policies across multiple lines of business covering both insurance and broker-dealer was a growing challenge — there was no systematic way to analyze millions of transactions and monitor risk across divergent lines of business. Additionally, continuously evolving regulatory guidelines and unfavorable internal audit findings resulted in additional scrutiny of the AML compliance program.

The client’s processes were highly siloed and manual — they leveraged disconnected legacy systems and spreadsheets to track and monitor risk through a limited set of rules that produced several thousand alerts per month. The underlying historical data was unstructured and housed in several sources that were managed by different, disconnected teams. The lack of a centralized case management system and obsolete alert review procedures made conducting investigations an ineffective, time-consuming and highly subjective process, susceptible to manual errors.  Faced with recent resource turnover, the client faced the daunting task of navigating these challenges shorthanded and in an accelerated period of time. The objective was to transform its program to address gaps and inconsistencies, as highlighted by its internal audit findings, and to bring enhanced effectiveness and efficiency.

The client turned to EY and its vast experience in the AML regulatory compliance domain to assist with its growing needs and pain points. Our client was looking to introduce automation into its monitoring lifecycle to eliminate manual processes, improve AML and sanctions risk coverage for insurance and broker-dealer products, enhance investigative quality through consistent and regulatory-driven procedures, reduce false positives, and ultimately reduce financial crimes compliance costs. 

At the outset, EY professionals conducted a quick and thorough assessment of the client’s current state and maturity baseline to determine focus areas for the compliance program transformation. Based on this prioritization and working closely with the client, the EY team designed a transformational roadmap that immediately addressed near-term tactical needs while defining the approach to strategically transform the program through the following initiatives: 

• Tune and optimize sanctions screening to reduce false-positive alerts and transition the sanction screening and investigations to an EY Managed Services model
• A phased approach of transforming the AML Transaction Monitoring program from an in-house, manual monitoring program, containing often redundant controls, to EY Managed Services, operating efficiently across subsidiary businesses

EY Managed Services provided core transformation capabilities across people, technology and processes. The EY team focused on delivering value with the following capabilities:

• Deploying and configuring the EY AML monitoring technology platform in our cloud infrastructure with:
  • Transaction monitoring aligned to insurance, annuities and asset management risk typologies, tuned and optimized for effective risk coverage using our AML tuning methodologies
  • Case management providing centralized data storage of alerts and cases, dynamic and automated workflows, and automation to assist investigators in conducting alert reviews
• Updated AML transaction monitoring and sanction screening alert investigation procedures to align with enhanced coverage and updated technology
• Experienced onshore and offshore EY operations teams scaled based on program needs focusing on:
  • AML and sanctions investigations supporting the client’s regulatory reporting obligations for AML and sanctions with quality and consistency
  • AML subject-matter advisory support for evolving regulatory requirements and rapidly changing financial crimes risk due to transformative products and payments
  • Day-to-day technology operations, including data ingestion, alert generation, ongoing technology support and maintenance

Through a phased approach, EY professionals implemented the EY Managed Service model and transformed our client’s AML monitoring program across multiple separate subsidiaries within a four-month period. 

The client was extremely satisfied with their AML and sanctions program’s transformation in a relatively short period of time. The successful initial transformation resulted in the client extending EY Managed Services to additional subsidiaries within its business portfolio. 

Since we began working together, the client has developed a comprehensive and consistent AML monitoring program at a significantly reduced cost compared to other vendors and in-house options. We helped achieve the following benefits for our client:

• Our outcome-based fee structure, coupled with the ability to scale resources and leverage technology, has reduced the client’s costs for its AML program by 60%, compared to a traditional AML platform vendor and internal AML operations team.
  
• The client’s program now has data, technology and procedures tailored to specific risk coverage required for annuities, insurance and asset management products and services.
• The updated desktop procedures, advanced analytics and automation-driven case management technology capabilities bring actionable insights for each case, driving confident decision-making.
• Our transformation drove improved alert quality and around a 50% reduction of false-positive alerts across AML transaction monitoring and sanctions.
• With access to EY technology and scalable resources, the client’s management is free to focus on core business strategy and delivery.

With EY Managed Services, the client’s continuous transformation journey has only just begun. As our business relationship grows, technology evolves and use cases for managed services expand to other compliance areas, we see a great opportunity to further reduce costs across financial crime compliance programs and reframe plans for a brighter future.