Many financial institutions are still holding onto legacy anti-money laundering (AML) systems, opting to layer new technology over outdated infrastructure rather than starting afresh.
While this approach once seemed like a logical compromise—especially during the early stages of cloud migration—it now presents significant operational and compliance challenges. The reality is that incremental augmentation simply cannot match the capabilities of purpose-built NextGen AML solutions.
Napier AI, a provider of a next generation intelligent compliance platform, recently delved into why augmentation of legacy AML systems is not the answer.
The first misconception surrounds the idea that legacy systems are too deeply embedded to replace. Much like a failing building foundation that requires a full rebuild, outdated sanctions screening tools cannot be patched over to meet modern compliance expectations. Financial crime compliance today demands agile, multi-configuration screening capabilities that can be finely tuned through user-friendly interfaces. With regulatory change accelerating globally, banks must deploy systems capable of maintaining a risk-based approach across all business lines and jurisdictions—something legacy platforms struggle to support.
Cost is another common justification for retaining outdated AML systems that Napier AI highlighted. However, many banks fail to calculate the true total cost of ownership. Running multiple systems in parallel leads to duplicated licensing fees, API calls, and data subscription charges. In contrast, modern AML platforms offer a streamlined footprint, rapid deployment, and significant cloud efficiency. They also reduce alert volumes by enabling smarter screening configurations, helping to lower both cost and operational burden.
Some institutions have attempted to bolt on a sandbox environment to their existing systems, hoping to improve testing capabilities. However, without seamless integration, such sandbox environments cannot provide the production-grade validation needed to avoid false alerts or compliance gaps. NextGen systems solve this by including an integrated sandbox that tests against live data, allowing institutions to evaluate changes in configuration before going live.
Ultimately, the path forward is clear: replacing outdated AML infrastructure is not just about technology—it’s about risk reduction, regulatory alignment, and strategic advantage. Relying on patchwork solutions only increases exposure and complexity.
Read the full story here.
Keep up with all the latest FinTech news here
Copyright © 2025 FinTech Global
Copyright © 2018 RegTech Analyst
