At the Building Societies Association’s recent 2025 Financial Crime Seminar in Leeds, BDO LLP hosted a session exploring Fraud Risk Management and Anti-Money Laundering and whether an integrated financial crime compliance approach was the way forward.
I hosted the session, with Tracey Kenworthy, Forensic Accounting and Valuations Director, and Vladimir Ivanov, Economic Crime Advisory Associate Director.
Fraud and money laundering are interlinked components of a broader illicit financial ecosystem in which criminals exploit building societies and other financial institutions to steal identities, access sensitive data, and conceal the origins of illegally obtained funds. While their ultimate objectives differ, both depend on manipulating the legal financial system.
Historically, fraud risk management (FRM) and anti-money laundering (AML) functions have evolved separately. This divide is reflected in their operational setups, technologies, and team structures. This structural separation has resulted in siloed working models, with FRM and AML teams often using different technologies and processes, despite their shared goal of preventing and detecting financial crime. However, there is growing recognition of the substantial overlap between the two, leading to the emergence of an integrated approach known as FRAML.
FRAML represents a shift toward collaboration, recognising that both FRM and AML functions rely on similar data, pursue aligned objectives and often require similar remedial actions when illicit activity is detected.
By integrating FRM and AML operations, financial institutions can benefit from:
- A holistic view of financial crime risk.
- Improved detection capabilities by leveraging both real-time analytics and retrospective pattern analysis.
- Reduced duplication of effort and increased resource efficiency.
- Enhanced regulatory compliance and better protection of customers and brand reputation.
The nature of both fraud and money laundering are becoming increasingly hybrid and complex, and facilitated by rapid technological change and AI. The evolution of AI and digitisation has increased cross-border capabilities, allowing for faster, more sophisticated criminal schemes, making detection and prevention more difficult.
Looking ahead, continued innovation and adaptation by criminals is expected. One of the most stark examples of this is in relation to generative AI (GenAI) which (in addition to its transformative potential) has garnered widespread attention for the troubling rise in its misuse by criminals. As noted in
BDO’s 2025 FraudTrack report, we have seen a huge step forward in the capability and accessibility of AI tools in recent times and that trend is expected to continue to offer fraudsters massive opportunities for technology-enabled fraud schemes.
A recent survey found that AI voice cloning scams appeared to be one of the fastest growing types of fraud in 2024, having targeted up to 30% of respondents. Synthetic identity fraud is also expected to become even more commonplace. Here, fraudsters create new identities based on stolen data from genuine individuals, that is then enhanced through generative AI. Fraudsters will continue leveraging AI to increase the scale and success of their criminal schemes.
As criminal tactics evolve, breaking down silos and fostering collaboration between AML and FRM functions has become both a strategic advantage and a regulatory expectation. The FCA’s Financial Crime Guide now illustrates, as one of the examples of good practice, that “A firm has considered how counter-fraud and anti-money laundering effort can complement each other”.
While the idea of combining AML and FRM processes may seem like a daunting task, even modest steps—like improving data sharing – can significantly enhance detection and response capabilities across both domains.
Advantages and Challenges of an Integrated FRAML approach
Advantages
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Challenges
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Unified View of Risk - Combines FRM and AML data for a more complete picture of financial crime threats.
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Data Integration Issues - Legacy systems and poor data quality can hinder effective integration.
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Increased Effectiveness & Efficiency - Reduces duplication through shared alerts and investigations, and enables faster resolutions and better identification of complex schemes.
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Differences in Monitoring Styles - Fraud detection is typically real-time, whilst AML monitoring is typically retrospective. This timing mismatch complicates system and workflow alignment
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Proactive Risk Management – An integrated approach allows firms to move away from often reactive siloed processes to proactive, coordinated risk prevention, enhancing operational synergy and strategic investigation.
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Differing Focus Areas - FRM teams focus on immediate financial risk while AML teams on regulatory compliance. These divergent goals may raise regulatory concerns if one function is deprioritised in the integration.
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Stronger Teams - Promotes collaboration and knowledge sharing, enabling cross-training, improved morale, and better retention through career growth opportunities.
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Team Integration Complexities - Combining teams with different skills, terminologies, and cultures is operationally demanding.
Additional training is needed and may not fully replicate the expertise of specialised teams.
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What should Building Societies considering an Integrated FRAML approach keep in mind
1. Understand Inherent Risks
- Whilst Business Wide Risk Assessments (BWRAs) are common from a money laundering perspective, they are historically less common from a fraud perspective.
- Before any integration of FRM and AML can happen, firms need to holistically understand their risk exposure.
- This will serve as the foundation to understanding if/how controls can be integrated.
2. Assess Systems, Data, and Processes
- Conduct detailed reviews of data quality, system capabilities, and workflow processes for both FRM and AML.
- Identify data gaps and underutilised sources.
- Understand how alerts are generated and managed across both functions.
3. Share Information, Data, and Systems
- Ensure shared access to systems, alerts, and data between FRM and AML teams to strengthen detection and prevention capabilities.
4. Promote Collaboration
- Encourage regular communication and cross-training between teams.
- Share case insights and strategies to build mutual understanding and enhance effectiveness.
5. Proceed Slowly and Strategically
- Full integration is complex. A phased approach may be more practical - keep teams separate initially; introduce shared leadership, training, and cooperation protocols; and gradually build toward unified systems and processes.
6. Monitor Continuously
- Regular monitoring, analysis, and feedback are needed to ensure your FRAML approach remains effective and useful.
- Use monitoring insights to refine and adapt FRAML strategies.
7. Regulatory Compliance
- Regulatory pressure is driving greater financial crime integration.
- Ensure FRAML approaches meet evolving regulatory expectations to avoid fines and reputational harm.
A FRAML approach offers significant operational, financial, and investigative benefits. However, to succeed, firms must overcome challenges in data management, team coordination, and aligning objectives—while maintaining compliance and effectiveness across both FRM and AML domains. Effective FRAML integration is strategic, incremental, and collaborative. Success hinges on robust risk understanding, strong governance, cross-functional cooperation, smart tech use, and constant regulatory alignment. Start with understanding risk, data alignment, and collaboration, then build toward a more integrated FRAML approach over time, balancing ambition with operational readiness.
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At
BDO, we understand the importance of a strong risk management framework. BDO’s Economic Crime Advisory team works in close partnership with clients, obtaining a deep understanding of their business and providing expert guidance and support to businesses in navigating the complex landscape of financial crime. We act as a strategic partner, providing clear advice which is both balanced and constructive. We have experience in reviewing and helping firms to enhance their financial crime risk management frameworks.