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Introduce the Vendors

Vendor — one that vends or sells. Queue the image of a street vendor always hassling a busy city block of people that aren’t interested in what’s being sold! Now, in an effort to erase that image — lets call vendors, solutions providers from herein.

The following categories are the best way to think about solutions providers: (1) professional services firms— that sell consulting, advisory, managed services or staff augmentation; (2) technology companies— that sell software, artificial intelligence, machine learning, and robotics processing automation; and (3) data companies— that sell public, commercial, and curated content.

Solutions providers sell to both government and industry and sometimes even sell to each other. However, the target market segment is really regulated financial services firms within industry.

The sole purpose of solutions is to fulfill a need — whether that be a gap in knowledge, human capital, or technology.

The U.S. AML Regime is still new. Most experts will point to the 2001 USAPA as the spring board to a burgeoning complex (industry). Naturally, knowledge takes time to acquire and spread throughout a cadre of professionals. Additionally, a cadre of professionals takes time to build. Finally, it takes technical development time to translate business requirements into technical solutions.

The Conflicts of Procurement

Procuring solutions is as tricky as it gets. Providers struggle to find their symbiotic place in the U.S. AML Regime. Regardless of how the solution fulfills a gap — most buyers in this space are skeptical, resistant, and burdened by having to procure knowledge, people, and technology.

The conflict model within is often amplified by budget constraints, business priorities, and management’s inadequate view of the AML “compliance” burden.

Markets are a direct reflection of behaviors. In this market, buyers are generally reactive which means that their needs often only surface when specific events occur (audit/exam issues, acquisitions, etc.). The effect is a very irregular or unnormalized environment for providers. The further effect is that providers have to capitalize tactically on these irregular opportunities. It makes for an obviously unnatural relationship (often times filled with friction from the start).

The first step is for boards and management teams to view investment in the AML space as a strategic imperative. Subsequently, AML officers should be held accountable through direct ownership of budgets with P&L targets just like other business unit executives throughout the enterprise. Regulation, or regulatory action should not trigger the need — a strategic plan should drive the procurement of necessary solutions that enable an effective and efficient AML program.

If the market behavior normalizes so too shall the providers. Shifting the mindset from capitalizing on short term opportunities to building long term solutions (whether through services or products) will afford for a much more symbiotic relationship. Friction is naturally removed when two parties feel a legitimately equitable amount of value being exchanged. Partnerships ensue, innovation is more encouraged, and ultimately embraced by the market — the result is a more productive ecosystem where everyone wins (and hopefully the bad guys are the only remaining players that get hurt).

Clarity amongst Confusion

Make no mistake — solutions providers can be the key to your success or failure. Mutual respect between buyers and sellers is a fundamental starting point. Transparency and alignment between needs and capabilities foster trust and credibility. Expressing and demonstrating a value proposition that equates to a long term partnership avoids the conflict that persists today.

Thought Leadership Series
An Article by Vic Maculaitis, CAMS
Founder & Chief Executive at THE DATA INITIATIVE

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