Topics In Demand
Notification
New

No notification found.

How Compliance as a Service (CaaS) Is Transforming Financial Crime Risk Management
How Compliance as a Service (CaaS) Is Transforming Financial Crime Risk Management

June 26, 2025

10

0

Financial institutions globally face increasing pressure to combat financial crime while navigating complex regulatory frameworks. In the United States, where financial systems drive significant economic activity, compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations is paramount. In India, rapid digitization and evolving regulations present unique compliance challenges.

According to reports, global financial institutions spend approximately $213.9 billion annually on financial crime compliance. Compliance as a Service (CaaS) provides a transformative approach, leveraging advanced technology and expertise to streamline financial crime compliance processes.

This article explores how Compliance as a Service (CaaS) simplifies financial crime compliance for banks, with a focus on the U.S. landscape and relevant insights from India to offer a global perspective.

Financial Crime Compliance Challenges

Banks worldwide contend with regulatory complexity, technological limitations, and sophisticated criminal tactics. Some of the key challenges banks globally encountering are as follows:

1. Stringent Regulatory Requirements 

U.S. banks must comply with rigorous regulations, such as the Bank Secrecy Act (BSA) and the USA PATRIOT Act, mandating robust AML and CTF programs. In 2024, Suspicious Activity Report (SAR) filings saw a slight decrease after a period of significant growth. While filings surged by 51.8% between 2020 and 2024, peaking in 2023, the year 2024 saw a marginal decline, according to NICE Actimize. However, despite this overall decrease, specific areas, like terrorism-related SARs, saw increases.

2. Cybercrime Proliferation 

The FBI’s 2024 Internet Crime Report records over 859,000 complaints and losses hitting $16.6 billion—a 33% increase over 2023. These are driven mainly by:

  • Investment fraud (~$6.6 billion)
  • Business Email Compromise (BEC) (~$2.77 billion) 
  • Tech support scams (~$1.46 billion)
  • Personal data breaches (~$4.45 billion)

Over 56% of these losses involved cryptocurrency (~$9.3 billion), a 250% increase from 2023. Alarmingly, individuals aged 60+ lost nearly $4.8 billion, reflecting a 43% rise in elder fraud incidents and a 46% uptick in complaint volume

3. Legacy System Inefficiencies

A 2024 fintech/Forbes survey reports 55% of banks cite legacy systems as a core barrier to digital transformation. These outdated infrastructures complicate integrations with real-time analytics, API-driven ecosystems, or cloud-native BaaS finance.

In India, banking sector faces some unique challenges driven by its rapid digitization and regulatory evolution. These includes:

1. Rising Financial Fraud 

The Reserve Bank of India (RBI) reported over 13,000 bank fraud cases in 2024, with public sector banks accounting for frauds valued at ₹10,507 crore (Statista, 2024). Financial frauds, particularly via digital platforms like UPI, comprised 75% of cybercrimes from 2020 to 2023.

2. Digital Banking Risks 

India accounts for 48.5% of global real-time digital transactions, amplifying cyber risks. Aadhaar Enabled Payment System (AePS) frauds accounted for 11% of cyber financial scams in 2023.

3. Evolving Regulatory Framework

The RBI’s updated KYC norms, including video KYC and centralized KYC (CKYC) integration, increase operational complexity for banks striving to meet dynamic standards.

Compliance as a Service - A Strategic Solution

Compliance as a Service (CaaS) is a managed service model that integrates advanced technology, domain expertise, and process optimization to deliver scalable compliance solutions. By outsourcing specific compliance functions, banks can reduce costs, enhance accuracy, and focus on core operations. CaaS leverages emerging technologies, such as artificial intelligence (AI), machine learning (ML), and advanced data analytics to improve capabilities, such as real-time transaction monitoring, CDD, and sanctions screening.

For instance, solutions like ALFA provide enterprise-grade AML compliance and financial crime risk mitigation through AI-powered real-time transaction monitoring and watchlist screening. In India, such solutions support RBI’s KYC and fraud prevention mandates, addressing challenges like AePS fraud. Additionally, platforms like Fluent, an e-learning solution for digital knowledge management, enhance employee skilling to ensure compliance teams are equipped to handle evolving regulations. By integrating seamlessly with existing systems, CaaS ensures real-time monitoring and reporting, reducing manual intervention and enhancing operational agility.

Key Benefits of CaaS for Banks

1. Cost Efficiency

A 2022 Deloitte study estimated that managed compliance services could reduce compliance costs by up to 30% through automation and economies of scale (Deloitte, 2022). This is critical for U.S. banks managing high compliance costs and Indian banks addressing fraud-related losses.

2. Scalability and Flexibility 

CaaS solutions scale to handle complex transaction volumes, such as cross-border payments in the U.S. or UPI-driven transactions in India, adapting to regulatory changes without extensive infrastructure changes.

3. Enhanced Fraud Detection

AI-powered CaaS platforms reduce false positives in transaction monitoring by up to 40%, as reported by McKinsey (2023), addressing issues like BEC in the U.S. and digital scams in India.

4. Access to Expertise

CaaS providers offer global best practices and specialized talent, enabling U.S. banks to streamline SAR filings and Indian banks to tackle mule accounts without in-house recruitment challenges.

Implementing CaaS - Practical Considerations

To adopt CaaS effectively, banks must prioritize:

  • System Integration
    Solutions like ALFA ensure compatibility with core banking systems, aligning with FinCEN’s data standards for U.S. banks and RBI’s digital security guidelines for Indian banks. A case study illustrating how a U.S. bank achieved a 75% reduction in false alerts for sanctions compliance highlights the practical impact of CaaS.
  • Data Security and Privacy
    Providers must comply with U.S. regulations like the Gramm-Leach-Bliley Act and India’s data protection laws to safeguard customer data against cyber threats.
  • Regulatory Alignment
    Expertise in U.S. (BSA, PATRIOT Act) and Indian (RBI KYC, AML/CTF) regulations is essential for seamless compliance.
  • Employee Skilling 
    Leverage e-learning and knowledge management platforms to support compliance teams and providing digital learning tools to keep staff updated on regulatory changes and best practices.

Conclusion

As financial crime grows more sophisticated and regulations intensify, banks face mounting pressure to modernize compliance. Compliance as a Service (CaaS) offers a scalable, cost-effective solution by integrating advanced technologies like AI-powered AML, real-time monitoring, and automated KYC. It helps banks tackle high SAR volumes and cybercrime losses, while supporting rapidly digitizing financial sector. CaaS also addresses legacy infrastructure challenges, enabling faster, more accurate compliance outcomes. By turning compliance into a strategic enabler rather than a burden, CaaS empowers financial institutions to stay ahead of risks, adapt to evolving regulations, and build greater operational resilience in a dynamic environment.


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


Anaptyss is a digital solutions and business services company based in Alpharetta, GA. The organization delivers digitally enabled, value-led managed services to a diverse clientele in the financial services industry. Anaptyss co-creates innovative solutions to help clients evolve their standalone tasks and processes to fully integrated and versatile functions/CoEs, transforming their business and technology operations. Anaptyss' globally scalable managed services ecosystem, driven by the proprietary Digital Knowledge Operations™ approach, offers clients access to new-age intelligent digital technologies, deep-domain expertise, and top-tier talent.

© Copyright nasscom. All Rights Reserved.