Looking Beyond the Missed SAR: Using Root Cause Analytics to Strengthen AML Controls During the Regulatory Reset
This is Part 2 of SEDA Experts’ 5-part series: From Remediation to Resilience: you can find Part 1 here.
“The most expensive mistake an institution can make is correcting yesterday’s deficiency while leaving tomorrow’s vulnerability untouched.”
Introduction: The Regulatory Reset Demands More Than Corrective Action
Anti Money Laundering (AML) remediation has traditionally followed a familiar path:
Identify deficiencies ⮕ perform lookbacks ⮕ file late Suspicious Activity Reports (SARs) where appropriate ⮕ update policies and procedures ⮕ document completion.
While that approach addressed historical weaknesses and solved that day’s issues, today’s regulatory environment demands more.
Elevated U.S. risk assessments, evolving Financial Crimes Enforcement Network priorities, geopolitical sanctions, digital assets, artificial intelligence, synthetic identity fraud, and increasingly sophisticated criminal organizations are changing both financial crime risk and supervisory expectations. Institutions must correct their deficiencies, but they must also demonstrate that remediation has strengthened their ability to identify emerging risks.
A missed SAR is more than an indication of an isolated operational error. It may be the visible symptom of weaknesses in customer due diligence, monitoring, investigations, data, staffing, quality assurance, escalation, or governance. The critical question is not only whether suspicious activity was missed, but what that failure reveals about the institution’s broader control environment. This is why mandated lookbacks and consent orders are required when only a few “simple errors” occur.
Article One introduced the AML Controls Effectiveness Assessment (CEA) as a framework for evaluating financial crime controls as part of an integrated system. Root Cause Analytics provides the discipline for turning lookback findings into evidence about how that system is performing—and where it remains vulnerable.
From Root Cause Analysis to Root Cause Analytics
Root Cause Analysis explains why a specific event occurred: it identifies the immediate contributing factors and defines corrective action intended to prevent that event from reoccurring.
Root Cause Analytics goes further: it aggregates findings across cases, customers, products, business lines, investigators, technologies, and time periods to identify recurring patterns, concentrations, and systemic weaknesses.
For example, a traditional review may conclude that an investigator failed to recognize suspicious activity. Root Cause Analytics asks whether:
investigators had complete customer information,
monitoring scenarios reflected current risks,
case-management tools provided sufficient context,
quality assurance identified similar deficiencies, and
management reporting showed deteriorating performance.
Each question moves the inquiry away from individual blame and toward control effectiveness.
Analytics can then test whether the issue is isolated or recurring. Findings may be segmented by business line, customer risk tier, product, scenario, investigator tenure, disposition, or quality-assurance result. Trends and correlations can reveal whether a small number of control weaknesses are driving a disproportionate share of missed activity.
The result is more useful than a collection of individual corrective actions. Leadership gains a prioritized view of the weaknesses creating the greatest residual risk and can direct investments in people, process, data, technology, and governance accordingly.
How SEDA Helps Turn Findings into Action
SEDA helps institutions design and execute this analysis by combining AML subject-matter expertise with structured data review. Our teams can develop root-cause taxonomy, consolidate findings from lookbacks and quality reviews, identify patterns across control areas, and translate those patterns into prioritized remediation initiatives with measurable success criteria.
We also help management determine what evidence is needed to validate improvement—whether through targeted sampling, trend analysis, scenario performance, quality results, staffing measures, or governance reporting. The goal is not to produce another analysis that sits beside the remediation plan. It is to create decision-ready intelligence that strengthens the plan and demonstrates that corrective actions are working. SEDA root cause analytics provides independent evidence that both governance and transactional controls have improved.
SAR errors carry consequences far beyond the cost of correction. Lookbacks and SAR re-filings consume significant resources, increase regulatory scrutiny, and create avoidable financial and reputational risk. Investing in robust root-cause analytics and strengthened remediation governance now is not simply a compliance expense; it is an investment in preventing recurrence. We must commit the resources necessary to identify systemic drivers, remediate them at the source, and establish governance that ensures corrective actions are sustained. The choice is clear: invest proactively in getting to the root cause today or pay for the same failures again tomorrow.
During the Regulatory Reset, effective remediation does not end when historical transactions have been reviewed. It ends when leadership can show that the institution has learned from those findings, addressed the systemic causes, and improved its ability to recognize and manage future financial crime risk.
The opinions, views, and statements expressed in this article are solely those of the individual authors and do not represent, reflect, or constitute the views or opinions of SEDA Experts.
EXPERT INVOLVED
Kenneth Simmons - Managing Director
Kenneth Simmons is one of the nation's leading experts in Bank Secrecy Act (BSA), Anti-Money Laundering (AML), and OFAC sanctions compliance. As a former Functional Examiner-in-Charge (EIC) for both the FDIC and OCC, he has extensive experience evaluating institutions ranging from community banks to some of the country's largest financial organizations.
In addition to serving in executive compliance leadership roles within the banking industry, Ken is a Faculty Member and Review Board Member for ACAMS, where he helps educate compliance professionals worldwide. He advises financial institutions on regulatory compliance, independent audits, risk management, and building effective BSA/AML programs.
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