Code-Based Rule Management is the practice of defining and maintaining compliance rules, thresholds, and workflows in code-like formats rather than relying on manual interfaces or opaque system settings. By treating rules as code, financial institutions can version-control, test, and audit their AML frameworks with the same rigour as software development.
In anti-money laundering (AML) compliance, this approach improves transparency, governance, and auditability. It ensures that firms can demonstrate to regulators exactly how a rule was defined, why it was triggered, and when it was changed.
Definition Of Code-Based Rule Management
Code-Based Rule Management is the structured representation of compliance logic (e.g., transaction monitoring thresholds, fuzzy matching parameters, alert escalation rules) in code or code-like syntax. These rules are stored in repositories, enabling:
Version control – tracking all changes to rules over time.
Peer review and approval – ensuring governance over changes before they go live.
Testing – validating rule effectiveness before deployment.
Auditability – providing regulators with evidence of historical configurations.
This practice aligns closely with Configuration-as-Code but focuses specifically on business rules and detection logic rather than broader system configurations.
Why Code-Based Rule Management Matters For AML
In AML and financial crime compliance, rules form the backbone of detection. How they are created, updated, and governed determines both effectiveness and regulatory trust.
Transparency For Regulators
Supervisors expect firms to show how thresholds and detection rules are calibrated. Code-based management provides a transparent, traceable record of changes.
Governance And Accountability
Rules stored as code can be reviewed and approved, enforcing segregation of duties and aligning with governance frameworks.
Reducing False Positives
Rules that are poorly calibrated generate overwhelming false positives, studies suggest 90–95% of AML alerts are false positives. Managing rules as code enables ongoing refinement, reducing inefficiency.
Agility In Compliance
Sanctions and regulatory requirements change quickly. Code-based rules can be updated and rolled out consistently across systems, avoiding fragmented manual changes.
How Facctum Aligns With Code-Based Rule Management
While Facctum does not sell “rule-as-code platforms” directly, its products are built to support configurable and auditable rules in line with this approach:
FacctView, Customer Screening – configurable fuzzy matching thresholds, ensuring transparent name screening.
FacctList, Watchlist Management – centrally maintained sanctions and PEP data that underpin rules consistently across systems.
FacctGuard, Transaction Monitoring – behavioural rules and monitoring scenarios that can be adjusted, reviewed, and audited.
Alert Adjudication – escalation and decision workflows that are configurable and fully auditable.
These capabilities give compliance teams rule transparency and governance, aligning with the principles of code-based management.
Challenges In Code-Based Rule Management
Skills Gap
Compliance teams may not have coding knowledge, requiring closer collaboration with IT or engineering.
Complexity Across Systems
AML rules often span multiple products and jurisdictions, making coordination a challenge.
Change Management
Shifting from manual or interface-based rules to code-based systems requires cultural and operational changes.
Best Practices For Code-Based Rule Management
Adopt Version Control: Store all rules in repositories for full change history.
Require Governance Reviews: Enforce approval workflows before rules go live.
Test Rules Pre-Deployment: Validate thresholds and logic to reduce noise.
Align With Regulatory Guidance: Ensure rule updates follow a risk-based approach, as recommended by FATF.
Integrate With Audit Reporting: Provide regulators with historical views of rule sets and change approvals.
The Future Of Code-Based Rule Management
As AML technology evolves, code-based rule management will become standard practice:
Explainability: Rules written in code provide transparency regulators increasingly demand.
Automation: Machine learning models may propose new rules, with governance layers ensuring oversight.
Global Consistency: Code-based management makes it easier to align rules across jurisdictions.
Operational Resilience: Version-controlled rules support rapid redeployment in recovery scenarios.
Firms that embed code-based rule management into their AML processes will demonstrate both compliance integrity and technological maturity.
