In the coming years, financial crime detection and prevention will enter a new era. The wave of EU anti-money laundering (AML) reforms, announced in May 2024, is pushing banks not just to demonstrate their effort to combat financial crime but also deliver measurable results. This is driving the need for stronger, more effective financial crime controls.
Simultaneously, banks are reshaping their operations to be more efficient and risk-based, having to perform a delicate balancing act between achieving efficiency gains and meeting growing regulatory demands. The Valcon FinCrime Outlook 2026 provides banks with practical guidance in how to remain competitive in an increasingly demanding financial crime landscape.
1. One rulebook: the impact of new EU-wide AML regulation
Europe’s fragmented AML landscape is starting to fuse. The new Anti-Money Laundering Regulation (AMLR) sets out to create a single, clear framework that all member states of the EU must follow by July 2027. Until now, a key challenge for financial institutions has been uncertainty around data sharing with other parties. The AMLR creates an opportunity to revisit and clarify how customer information can be shared, not only between firms but also between firms and government bodies.
The practical implications of these developments are significant. For a start, it will involve a big push in terms of policy renewal and process redesign: Because the AMLR applies directly to all member states, compliance frameworks can be simplified to reflect the overall international standard. However, this requires existing procedures to be updated to reflect the new standards, particularly regarding data collection, customer due diligence and the sharing of sensitive information. Another is cross-border data sharing with different parties – the regulation creates a clear legal basis for sharing customer, transaction and risk data across EU borders, enabling banks to build unified customer risk profiles and avoid duplicating KYC/CDD work in each country. A third is public-private partnerships – the regulation lays out the groundwork for enhanced cooperation, but the specifics, particularly which data may be shared and under what circumstances, still need to be defined.
This regulation outlines clearer expectations, but also creates an operational burden, as institutions need to collect, process and manage client information much more intensively than they have previously.
2. Redefining KYC: improved risk detection boosted by public data
The traditional, fixed, time-driven approach to Know Your Customer (KYC) is not compatible with today’s complex risk landscape. Banks are restructuring to enhance their data-driven decision-making and boost the efficiency of their financial crime processes. And expanded access to public records, reinforced by the new AML regulation, combined with advanced analytics and the rise of AI, is accelerating the shift toward continuous KYC.
This shift has numerous practical implications. It will start to reshape the compliance and financial crime workforce as banks move from manual compliance tasks toward roles focused on data analysis, model oversight and risk interpretation. They are also investing in multidisciplinary teams to build and operate more continuous KYC processes.
Another impact is dynamic risk management - by improving data collection, potentially through access to open registries like the BRP in the Netherlands, banks can assess risks more effectively and lower their manual overhead. Reliable, high-quality data is crucial to enabling automated dynamic risk management.
And the last is improved governance and control. Automating checks heightens the need for robust governance, maintaining transparency and traceability in decision-making.
Continuous KYC raises the bar for operational efficiency and regulatory adherence, allowing compliance teams to focus resources on actual risks.
So how do financial institutions mobilise to adapt to this new era in fighting financial crime? They need to pursue two parallel tracks to succeed:
- Redesign structures and processes: this is first on the list and they need to do this by redefining their operating models and reshaping their financial crime workforce to support continuous, risk-based KYC and meet regulatory and business demands. The focus needs to be on clarity, control and reducing client friction.
- Leverage advanced technology and data capabilities: the second step is to operationalise continuous KYC, securely integrate public registers and build dynamic risk-scoring models. Making sure the data foundation is in order is crucial to make the most of technological advancements, like AI, to realise efficiency gains and reduce client friction.
The financial crime environment is a tough one to navigate. And threats are evolving and becoming more virulent all the time. For banks and other financial institutions, striking the right balance between realising efficiency gains while maintaining robust oversight is a challenge. But by continuously refining their operational processes, institutions can build their resilience and readiness to deal with the regulatory and financial crime demands of 2026.
Valcon helps financial institutions make the shift work by offering end-to-end solutions that integrate process, change, technology and data. Interested in discussing actionable steps for your organisation? Please get in touch with: [email protected], [email protected] or [email protected]
