PwC helps UK lender in anti-money laundering controls

Our Financial Crime Managed Services team modernised and expanded a leading UK retail bank’s transaction monitoring system to ensure full compliance.

In the digital age, everyday banking transactions can be exploited by fraudsters anywhere in the world, whether using stolen card details or passing off the proceeds of crime as revenue from a legitimate business. Banks that fail to keep pace with criminals who exploit weaknesses in their internal monitoring systems may face severe regulatory sanctions, with all the associated reputational and financial damage.

In 2022 a major UK lender realised that its transaction monitoring controls were no longer adequate, with a limited number of rules live to cover transactions being made by around 16 million customers. 

A mandatory regulatory review was imminent, which might result in non-compliance because it estimated the existing alert system had limited coverage. To ensure full compliance, it commissioned PwC’s Financial Crime Managed Services team to support a complete review and uplift of the system.

“There were two work streams that had to be undertaken,” said Tom Roberts, head of PwC’s financial crime transaction management operations, who led the team. “One was to support the deployment of new rules for triggering alerts, while the other was to check and review the existing rules and retune as required.”

When PwC began work in the summer of 2022, it was critical to win the bank’s confidence in the team and its methodology. A pilot programme that focused on a small number of suspicious transactions demonstrated the team’s expertise in dispositioning alerts and identifying and filing any suspicious alerts. Critically, the team also showed that it would not waste the bank’s resources by triggering needless investigations because of false alerts.

Having established internal trust, PwC rapidly scaled up its UK-based team to 90 people by October 2022. By May 2023, the team had checked around 60,000 alerts triggered by the new rules, while making sure that PwC’s support in upgrading and expansion of the transaction monitoring rules did not disrupt the bank’s everyday “business as usual” (BAU) operations. 

The project was eventually extended with completion in May 2024, as the bank adjusted its risk appetite in response to changing market conditions. In the end, the team reviewed far more than 60,000 alerts to verify that they met the bank’s risk coverage requirements, with the client using this data to satisfy the regulator that it had sufficient coverage of the payment systems and able to identify and disposition suspicious alerts in line with commitments. 

In Roberts’ view, the key to the project’s success was the effort that PwC made to build trust by seeing the challenge from the client’s point of view. “It would have been easy for us to take a narrow, transactional approach and just say to the client that yes, we will work through 60,000 alerts,” he explains. “Instead, we asked them to describe their specific transaction monitoring concerns and then applied our knowledge to develop a solution that was tailored to the bank’s needs. We were able to bring the best of PwC to our client by combining years of advisory expertise, coupled with demonstrable experience in running financial crime operations, to not only deliver on the ask successfully but also support across a number of areas, providing the best service to our client”

As further reassurance, PwC’s team could point to its successful track record with other banks.

New KYC opportunities 

PwC’s delivery of a fully modernised, comprehensive transaction monitoring system has generated further opportunities to work with the client on other projects. Since October 2023 a large part of the team moved to support the lender on its “know-your-customer” (KYC) programme including some of its highest risk customers. “Typically, the regulator is asking for a much tougher and more detailed level of information due to the type of customers these are and typically more complex financial holdings which can make it easier to hide the proceeds of crime,” says Roberts. 

In this work, the team’s experience in designing customised financial crime alert systems that leverage PwC’s technology know-how is helping the bank to reinforce its defences against increasingly sophisticated fraudsters.