A sandbox is an environment that provides compliance officers a controlled and isolated space for testing and developing customised rules in their anti-money laundering (AML) systems. By testing, tuning and running ‘what-if scenarios’ with live data in an isolated environment, organisations can optimise rules without committing to changes in the live environment, thus reducing false positives to enhance operational efficiency.
3 risks you’re taking if you don’t employ a well-built sandbox for effective rule building in your AML system:
Difficulty optimising detection (without significant costs)
It is good practice to change and optimise your financial crime compliance rules once or twice a year. Changing rules directly in a live system is unfeasible. Whether transaction monitoring or client screening, new rules shouldn’t be implemented without testing, justification, audit, role restriction and in an overall controlled process.
Testing new rules without a sandbox can take weeks to months, often reliant on external data scientists and consultants to manage the rule changes at great expense. In the absence of sandboxes, compliance teams often resort to downloading large transaction files. They then attempt to recreate their rules, often failing and seeking assistance from data scientists. This can lead to prolonged cycles of communication involving explanations of rules and data, along with the refinement of rules. Unfortunately, this process can result in significant frustration and increased costs for everyone involved. Some also take the approach of setting up an additional environment to run alongside the production system, which has proven to be both expensive and disruptive during upgrades.
That is why an effective, in-system sandbox is a must have for any modern AML system.
A modern AML system must let you modify, test and improve AML rules in real-time and with live or test data in the sandbox area without any need to understand code or upgrade the software while adhering to your organisation’s risk policies and appetite.
Failing regulatory scrutiny
A well-built sandbox supports version control, enabling organisations to maintain a comprehensive history of various iterations of AML rules, spanning different points in time. These sandboxes meticulously document all significant actions through an audit trail and enforce appropriate levels of permissions and controls. If you do not have the right audit trail and controls in place, you might find the regulator asking very uncomfortable questions during the next audit.
Regulators require a clear understanding of the ‘story’ or the contextual narrative that precipitated modifications to the rules: the sequence of actions taken, the methodologies employed for testing, and the subsequent outcomes. They also need to be re-assured about the safeguarding of data privacy and security.
A good sandbox will provide that centralised repository where the regulator will be easily able to address their inquiries and concerns effectively.
A bad user interface will slow you right down
The process of sending files via email, managing version control, and establishing communication between different systems can quickly devolve into chaos. Equally an old school user interface (UI) or user experience (UX) can transform what should be a straightforward task into a frustrating undertaking.
Compliance officers and administrators, have parallels with skilled airplane pilots. Just as these pilots undergo extensive training and possess a clear understanding of their objectives, compliance professionals are well-versed in their realm and comprehend their tasks.
Much like one wouldn't position critical cockpit controls in a place where pilots might struggle to locate them during a crucial moment, a well-crafted user interface and user experience play a pivotal role for compliance users. A streamlined UI/UX design empowers these professionals to concentrate on their tasks at hand, allowing them to focus on what needs to be accomplished rather than grappling with how to navigate the system.
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