AML transaction monitoring in the banking industry: regulatory framework and operational challenges

Money laundering (ML) is the process through which criminals try to disguise the illegal origin of their proceeds. Concealing the source of funds is essential for criminals to exploit illegally earned money. According to the United Nations Office on Drugs and Crime (UNODC), it must be regarded as one of the largest global markets and a severe obstacle to governments and international authorities, which affects society and the economy. This thesis work focuses on money laundering prevention procedures in the banking industry. It analyses the evolution of the international anti-money laundering (AML) regulatory framework, with particular attention to US, EU and Italian regulation, as well as the obligations of financial institutions. Then, a case study performed in Intesa Sanpaolo is presented, which allows the examination of the end-to-end path from the regulatory framework to the calibration of the algorithms, and the related operational challenges, used by the international banking group for Anti-Finance Crime purposes. Finally, this work includes the proposal of new methodologies for possible future developments.