Software Firms eye business in black money trail

With increasing instances of black money, corruption and frauds, both in the corporate world and the government, the anti-money laundering (AML) software industry is anticipating good business. Software applications monitor bank transactions on a daily basis and, using historical information and account profiles of customers, provide a "whole picture" to the bank's management. Transaction monitoring includes cash deposits and withdrawals, wire transfers and automated clearing house activity. Software packages are capable of name analysis, rule-based systems, statistical and profiling engines, neural networks, link analysis, peer group analysis and time-sequence matching.

Anti-money laundering software filters customer data, classifies it according to the level of suspicion and inspects it for anomalies, including any sudden and substantial increase in funds or a large withdrawal. Smaller transactions that meet certain criteria may also be flagged as suspicious. The software would also flag names placed on government "blacklists" and transactions involving countries that are thought to be hostile to the host nation. Once the software has mined the data and flagged suspect transactions, it generates a report.

The PMLA Act, 2005 forms the framework for combating money laundering in India. AML standards are defined by the Reserve bank of India under the guidance of Parliament and the Ministry of Finance. These guidelines, rules and regulations are monitored through the Financial Intelligence Unit, which has released nearly 50 recommendations subscribed to by many countries, including India.

Players in the AML segment in India include 3i infotech, Infrasoft Technologies, SAS, and Oracle Financial Services software. The global financial crime management technology market is expected to touch $3.75 billion by 2012, with a compound annual growth rate of 13 per cent. This includes all services and products for financial crime management. Asia AML software spending was estimated at $93 million in 2009, according to a report.

The report also said AML solutions should include customer due diligence, suspicious activity monitoring, case management and watch-list filtering.