An AML investigation is the process of reviewing a customer, transaction, or activity that has triggered suspicion of potential money laundering or financial crime. It begins when a monitoring system, analyst, or regulator flags something abnormal, whether it's a high-value transfer, a mismatch on a sanctions list, or a connection to a high-risk jurisdiction.

The goal of the investigation is to determine whether the activity is legitimate or if it warrants a Suspicious Activity Report (SAR). AML investigations are a critical part of any AML Compliance program and are usually conducted by trained compliance analysts or financial crime teams within regulated institutions.

What Triggers an AML Investigation?

AML investigations are typically initiated when a red flag is raised through one of several channels:

• An alert from a Transaction Monitoring system

• A sanctions or PEP match through Watchlist Management

• Unusual customer behavior picked up during Ongoing Monitoring

• A tip-off from law enforcement or a third-party institution

• A result from a Batch Screening update that finds a new match

Modern systems like FacctShield allow institutions to detect these red flags in real time. Once triggered, alerts are triaged and escalated for manual review.

The AML Investigation Process

very AML investigation follows a structured process designed to ensure accuracy, accountability, and regulatory compliance. While specific steps may vary between institutions or jurisdictions, the goal remains the same: to determine whether a flagged transaction or customer poses a financial crime risk and what action should be taken. A well-defined investigation process helps reduce false positives, speeds up decision-making, and ensures consistent outcomes, all of which are essential for auditability and regulatory defence.

1. Alert Triage and Case Assignmen

The alert is assigned to an analyst through a case management workflow. Analysts prioritize based on risk severity, potential exposure, and historical patterns.

2. Data Collection and Review

Investigators gather supporting documentation: transaction logs, customer records, onboarding data, KYC documents, and even open-source intelligence or Adverse Media Screening.

3. Risk Assessment and Pattern Analysis

Analysts look for red flags such as structured deposits, rapid movement of funds, links to high-risk jurisdictions, or inconsistencies in source of funds and Source of Wealth.

4. Disposition

Based on the findings, the investigator decides whether to clear the alert, escalate for enhanced due diligence (EDD), or submit a SAR.

5. Documentation and Reporting

Every step must be logged with a clear rationale, from investigative notes to the final decision. This documentation supports Audit Trails and regulatory reviews.

Tools and Technologies Used in AML Investigations

Investigators today rely on platforms that unify data from multiple sources, enhance visibility, and support decision-making. Some of the most valuable tools include:

• Customer screening systems like FacctView

• Real-time alert adjudication engines

• Entity resolution and graph-based link analysis

• Data enrichment and Knowledge Graphs

• Open-source intelligence (OSINT) and media search integrations

Research shows that systems using AI-driven data fusion reduced false positive investigations while improving SAR submission quality.

Common Challenges in AML Investigations

Despite growing tech capabilities, investigations remain difficult due to several issues:

• Data fragmentation: Siloed systems delay investigation timelines

• High alert volumes: Too many false positives from rigid rules

• Manual processes: Investigators often switch between spreadsheets, emails, and dashboards

• Inconsistent decisioning: Without audit-ready workflows, outcomes vary by analyst

• Time pressure: SARs must often be filed within a limited timeframe (e.g. 30 days in the U.S.)

These challenges highlight the importance of integrated tools, continuous AI Model Validation, and robust workflows for Compliance Workflow Automation.

Regulatory Expectations Around AML Investigations

Regulators such as the FCA, FinCEN, and EBA have made it clear: AML investigations must be:

• Timely

• Well-documented

• Conducted by qualified individuals

• Supported by systems that ensure consistency and traceability

Failing to investigate or report suspicious activity can lead to significant penalties, not just for the firm, but for individuals such as the AML Compliance Officer as well.