What is FRAML?

FRAML stands for fraud and anti-money laundering. It integrates fraud prevention and AML through shared information, coordinated monitoring, and investigations. The aim is to understand how the suspected fraud is related to the movement of potential criminal funds. Fraud can generate the proceeds that the criminals then move or conceal through the financial accounts. Therefore, the information  that is gathered during a fraud investigation can help the AML team to identify the suspicious activity. Similarly, unusual transaction patterns identified by AML monitoring can reveal accounts involved in fraud. FRAML does not require one customer risk score, one platform, or a merged team. Linked or shared systems support the approach, but the value comes from the use of relevant findings across both functions to inform action. 

Why combine fraud prevention and AML? 

Fraud prevention addresses deception committed against a business or its customers, including account takeover, fraudulent refund claims, scam payments, and applications that include false information. AML screening teams assess potential money laundering, including how the criminal proceeds enter, move through, or leave the financial accounts. Fraud is the source of these proceeds; however, the AML controls must need to address the other relevant criminal activity. 

When the teams work separately, each may carry information that changes the other’s assessment. A fraud complaint can identify the suspicious receiving account. Transaction monitoring may reveal that this account receives funds from several unrelated people and transfers them onward rapidly. The connection between those findings helps the team to assess the wider pattern, coordinate investigations, and reduce the repeated evidence that has been gathered. It does not mean that every fraud alert establishes money laundering, or every AML alert is an indication of fraud. FinCEN encourages the sharing of relevant information between AML, cybersecurity, and fraud prevention functions to improve the threat assessment and reporting.

How does the FRAML process work? 

The FRAML platform workflow brings together established practices for fraud and AML. Businesses can evolve and adapt it to their risks and legal obligations. 

Verify identity at onboarding: 

It includes the document checks, liveness, and AML screening that can run in a coordinated flow, so the suspected document fraud informs onboarding decisions and the wider risk assessment. 

Building a shared customer risk profile: 

Device signals, behaviour, screening hits, and the transaction history help the fraud and AML teams access the connected risks. Both teams can use shared evidence while retaining the separate risk scores and decisions.  

Monitoring Transactions and Behaviour: 

Establishing the connection between fraud and AML Transaction monitoring system to assess unusual payment activity and to determine potential laundering patterns. A new payee alone does not establish fraud. 

Coordinate case investigations: 

AML and Fraud analysts use shared or linked case records, which helps preserve evidence and reduce gaps during handovers. Each team retains responsibility for its decisions and actions. 

Report and Fine: 

File a Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) with the relevant FIU when applicable reporting criteria are met, within required deadlines. Use reviewed findings to improve onboarding and monitoring controls.

What does FRAML cover? 

Sanctions and PEPs can contribute to the additional context, while keeping their distinct purposes. A PEP match alone does not establish criminal activity. 

What does it mean in practice?

Consider a hypothetical scam payment. A customer reports being deceived into transferring money. The fraud team investigates the complaint and identifies the receiving account.  The AML team finds that this account has received similar payments from several people and quickly transfers it somewhere else. Sharing the complaint details and transaction findings helps the team in assessing whether the receiving account forms part of a wider fraud and laundering network. 

If the customer receives a refund, that addresses their financial loss. It does not explain the receiving account’s activity or remove the need to assess the suspected movement of the criminal proceeds. The related AML investigation may therefore continue after the fraud complaint is resolved.