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FTS Statement on STRIX Readiness for AMLA
The European Anti-Money Laundering Authority (AMLA) is a new regulatory body created by the European Commission as part of its effort to strengthen the European Union’s anti-money laundering (AML) and counter financing of terrorism (CFT) framework.
The AMLA is expected to play a key role in coordinating, providing risk assessment guidance, and overseeing AML efforts across EU member states. Its establishment is part of the broader EU AML action plan launched in 2021 to combat financial crime and address gaps in the enforcement of AML rules across Europe.
While the AMLA is still in formative phases, we expect activities to begin earliest in 2025 and reach full staffing earliest in 2027. The AMLA already has AML working groups that are in initial stages of generating a common AML/CFT Risk Assessment methodology and identifying scorable metrics.
Understanding this is a complicated process that will take due time, there is not yet any formal publication of underlying assessment methodology or the number and types of data points that will be used. This does create uncertainty for supervisors seeking to mature their AML/CFT Risk Assessments and their risk-based supervision.
We expect the new regulator to have roles of:
- Centralized Authority: coordinating and harmonizing the union effort in AML-CFT, in terms of
- practices and standards, minimizing fragmentation
- acting as a central fulcrum to coordinate union wide actions and risk assessment
- data repository for collection and redistribution of information
- Direct Supervision: AMLA will directly supervise approximately 40 entities and, in that respect, will act as any other national regulator
This points toward a clear need for SupTech providers such as FTS to anticipate more international cooperation, better integration across platforms and standards, flexibility in adapting data gathering process and risk scoring methodologies to fit in the new, but yet undefined, standards.
Fortunately, STRIX is well prepared.
Concerning AMLA methodology uncertainty:
STRIX already has multiple AML/CFT methodologies available to supervisors which conform to FATF guidance, embedded as a simple application setting. FTS can add further methodologies to STRIX, or adapt or enhance existing methods, without affecting other key functionality.
While STRIX is a modern, advanced risk assessment solution, benefiting from constant evolution, and which uses machine learning to produce precision understanding of risk, it would also be possible to implement a more rudimentary methodology if AMLA chose to conform to older models (e.g. hair-cut or flat-list methods) as a first step toward standardization.
Supervisors can expect STRIX to be compatible or capable of being made compatible for AMLA.
Concerning uncertainty in number and types of data points:
STRIX has been designed, since its beginning, as a flexible risk modelling engine, readily capable of future changes to the number and type of data points and other model evolutions.
Supervisors can expect STRIX to be compatible with the number and type of AMLA standardized data points.
How STRIX is ready:
Can existing clients modify their risk assessment models once AMLA guidelines will have to be incorporated?
Yes, STRIX allows regulators to fully customize new risk assessment models to meet a given set of data requirements, or to evolve existing models to include new data points and/or a reorganization of data points. Models can be manipulated with drag and drop, reordering, copied, copied-with-data, exported, and imported.
Can other surveys be performed in addition to the national reporting cycle?
Yes, STRIX has been used to perform thematic and ad-hoc surveys outside of regular reporting cycles, spanning themes from sanctions, VASPs, funds flows, and more.
How can Strix facilitate cooperation between regulators?
Strix allows for regulators to share two things:
- Their risk models and surveys (no data, only the list of questions, their configuration in the risk model and related factor weights)
- The entire reporting cycles (i.e. the resulting risk assessment, with data).
The first will be useful to align among regulators. For example, using Strix, AMLA could prepare the risk assessment and surveys and circulate the configuration directly to national regulators.
The second can be used to report back to AMLA the results of national level risk assessments.
What about language barriers?
Natural languages: As is the case for FATF guidance, STRIX’s native language is English. However, STRIX also supports multiple languages and can switch between them easily. All translated forms of questions are included when sharing the model / survey configurations previously mentioned above. For example, a regulator could send a survey in its local language, French, to AMLA where it can be open and read in English at a click of a button. STRIX already recognizes the local browser primary language and, if available, will switch to it automatically.
Machine languages: Strix speaks XBRL too. Several regulators – and their regulated entities – have made significant investments to take advantage of the automation, reliability and robustness of XBRL. Now regulators can receive XBRL instance files that will automatically populate surveys.
