Fixing AML Gaps with Smarter Customer Screening

With compliance requirements and expectations intensifying worldwide, the anti-money laundering (AML) market is forecast to grow from $2.92 billion in 2024 to $3.39 billion by 2025, climbing to nearly $6 billion by 2029.

This expansion is driven much by the globalization of financial services, the proliferation of digital payments and the increasing sophistication of financial crime — each demanding faster, smarter and more scalable compliance solutions.

Regulatory scrutiny has kept pace with these shifts. In 2024 alone, financial institutions faced more than $3.2 billion in fines for AML-related violations. A particularly notable case involved TD Bank, which was penalized $3.09 billion for systemic AML failures, including delayed Suspicious Activity Report (SAR) filings and lapses in monitoring suspicious transactions. These enforcement actions underscore the financial risks of non-compliance as well as the operational vulnerabilities that can arise when companies fail to modernize.

The Pitfalls of Scaling with Homegrown Solutions

Many organizations, especially in rapid growth phases, attempt to scale their internal fraud and AML systems using homegrown solutions. While this approach may offer initial flexibility or cost savings, built solutions often struggle to keep pace with the complexity and scale of modern financial operations. Outdated monitoring tools, manual processes, stale and siloed data can yield operational bottlenecks, delayed SAR filings and regulatory non-compliance.

Industry research suggests that up to 95% of system-generated AML alerts are false positives, overwhelming compliance teams and diverting attention from real threats. These limitations become especially apparent during rapid expansion or when entering new markets. Organizations risk critical failures without scalable architecture, robust audit trails and clearly defined service level agreements (SLAs). The TD Bank case is a cautionary tale, but not unique; it reflects a broader industry trend where compliance deficiencies are met with quick and severe regulatory action.

Real-Time Customer Screening: A Critical Differentiator

In today’s environment, real-time customer screening is emerging as a key differentiator for organizations striving for sustainable compliance. Businesses can identify and block suspicious activity by continuously evaluating individuals and entities against regularly refreshed global watchlists, politically exposed persons (PEPs) databases, sanctions lists, crime records and adverse media sources directly from official sources.

Smart Screening in Action

Modern AML solutions do more than surface obvious risks; they enable preemptive customer screening strategies that filter out suspicious users even before onboarding. For example, organizations can restrict access before a new customer is onboarded from high-risk jurisdictions based on IP analysis or flag profiles with weak digital footprints and unusual device configurations. This early intervention reduces downstream screening workloads, protects systems from malicious access and helps save money on KYC costs.

Real-time customer screening solutions automate risk checks, streamline onboarding and ensure continuous monitoring. Intelligent automation filters alerts and surfaces high-confidence matches using fuzzy logic, edit distance thresholds and dynamic scoring — helping teams prioritize what truly matters.

These technologies integrate both fraud and AML monitoring seamlessly via APIs, allowing businesses to define customer risk thresholds, customize monitoring frequencies and adapt to evolving regulatory requirements without delay. Whether screening at onboarding or maintaining weekly or on-change monitoring across jurisdictions, compliance teams can scale programs with precision backed by comprehensive audit trails documenting every action.

This shift from reactive checks to proactive, automated monitoring transforms how organizations approach AML compliance. Real-time customer screening enables smarter decisions, reduces operational drag and provides a defensible framework for meeting global regulations as businesses grow and diversify.

The Value of Specialized Partnerships

Sustainable compliance requires more than technology. It demands partnerships with specialized vendors who understand the regulatory landscape and provide proven, scalable solutions. Externally supported platforms offer technical expertise, robust SLAs, continuous product updates and dedicated support, ensuring that compliance programs remain resilient as organizations grow.

By working with experienced partners, organizations can bridge operational gaps and future-proof their compliance efforts. Integrated fraud and AML platforms that combine real-time customer screening with transaction monitoring, automated reporting and unified case management help reduce costs, enhance detection and protect against internal and external threats. Many organizations report improved efficiency, greater flexibility and a marked reduction in false positives — allowing compliance and risk teams to focus on strategic risk management rather than administrative firefighting.

Building a Sustainable Compliance Framework

Two lessons from recent enforcement actions stand out: regulators are decisively cracking down on AML deficiencies, and the financial consequences for compliance failures will continue to escalate. Navigating today’s intensified scrutiny requires more than incremental improvements — organizations need real-time, flexible and API-driven AML technologies to stay ahead.

Customer screening and monitoring platforms that can filter out bad actors before KYC checks, offer automation, customizable risk thresholds and continuous updates help shift compliance from a reactive burden to a strategic function. By integrating fraud signals, real-time and regularly refreshed data sources from official government lists and machine-assisted risk analysis, compliance teams gain the tools to move faster and act with greater precision.