Strengthening AML detection with 29% higher accuracy in 96 hours

The bank needed to rigorously test its AML detection system against sophisticated laundering techniques used by organized crime and sanctioned entities. The goal was to uncover gaps that criminals could exploit and strengthen defenses before vulnerabilities were abused.

• Validate system against advanced layering and structuring methods
• Test resilience against trade-based laundering schemes
• Identify weaknesses with shell company and cryptocurrency flows
• Ensure compliance with evolving regulatory expectations

Money launderers continuously innovate, exploiting blind spots in traditional detection methods. While the bank had strong AML rules, criminals' ability to mimic legitimate activity created vulnerabilities.

• Complex layering techniques obscuring fund origins
• Trade-based laundering hidden in commercial transactions
• Smurfing operations evading thresholds
• Sophisticated shell company networks
• Cryptocurrency creating new laundering vectors
• Previous testing limited to known laundering patterns

CleverX assembled a specialized team of financial crime experts to conduct comprehensive adversarial testing of the bank's AML detection capabilities.

Expert recruitment:

• Former law enforcement officials specializing in financial crimes
• Compliance officers with experience in high-risk jurisdictions
• Forensic accountants skilled in tracing complex transactions
• International banking specialists understanding cross-border schemes

Adversarial testing design:

• Simulation of sophisticated laundering operations across multiple accounts
• Creation of synthetic trade finance schemes hiding illicit flows
• Development of shell company structures testing beneficial ownership detection
• Design of cryptocurrency mixing patterns integrated with traditional banking

Validation framework:

• Systematic documentation of successful laundering simulations
• Risk rating for different evasion techniques
• Regulatory impact assessment for identified vulnerabilities
• Prioritized remediation roadmap based on exploitation likelihood

The engagement followed a structured timeline to maximize learning and corrective action.

Week 1-2: Expert team studied current AML rules and recent enforcement actions

Weeks 3-5: Development of sophisticated laundering scenarios based on real cases

Weeks 6-9: Intensive testing phase revealing detection gaps and vulnerabilities

Weeks 10-12: Enhancement implementation and validation testing

The process revealed how seemingly legitimate business flows could conceal illicit activity when criminals exploited thresholds and operational norms.

Detection enhancements:

Validation helped the system close critical gaps in detecting complex laundering.

• Better identification of layered transactions across accounts
• Improved recognition of trade-based laundering patterns
• Enhanced detection of beneficial ownership obfuscation
• More accurate flagging of cryptocurrency-related risks

Compliance strength:

The improved system boosted regulatory trust and reduced penalty exposure.

• Reduced risk of regulatory penalties for AML failures
• Better suspicious activity report quality and accuracy
• Improved response to law enforcement inquiries
• Stronger defense against regulatory examinations

Operational efficiency:

Validation reduced noise in alerts and improved investigator focus.

• Reduced false positives while catching more true violations
• Better investigator productivity through improved alert quality
• Faster case resolution through better evidence gathering
• Improved resource allocation based on risk

Risk management:

The strengthened system reduced exposure and bolstered board-level confidence.

• Lower exposure to money laundering schemes
• Better protection against reputational damage
• Improved ability to exit high-risk relationships
• Enhanced board confidence in AML controls

This initiative was recognized by a banking compliance association for excellence in AML program validation through adversarial testing.