When is AML outsourcing more advantageous than in house for financial companies

Nikita Veremeev

18.12.2025 | 6 min read

Updated: 18.12.2025

In recent years, average global spending on AML compliance for financial institutions has grown at double-digit rates and already amounts to billions of dollars annually. At the same time, requirements for Customer Due Diligence (CDD), Enhanced due diligence (EDD), transaction monitoring, sanctions screening, and for cross-border transactions: Travel rule compliance, have tightened. Regulators in the EU, including supervisory authorities operating under KNF requirements and GIIF guidelines, in Asia and the Middle East regularly raise the bar of expectations for financial companies and fintech providers.

According to recent reviews of regulatory spending in Europe and Asia, switching to an AML outsourcing model can reduce total AML compliance costs by 30–40% and at the same time accelerate the launch of the full compliance cycle by 2–3 times compared to building an in-house AML function. At COREDO this picture is confirmed by practice: when launching licensable projects in the EU and Singapore, the COREDO team has repeatedly seen clients save quarters of time and hundreds of thousands in equivalent simply by choosing the right model.

But behind the cost savings lies a subtler question. An entrepreneur, executive or CFO looks more broadly:
will we lose control? how to protect data? how will this affect the company’s valuation by investors?
Which model, outsourcing vs in-house, will provide the best AML outsourcing ROI and reduce money laundering risks (ML/TF) and regulatory penalties in a specific jurisdiction and for a specific business model?

In this article I will analyze when outsourced AML solutions are objectively more advantageous and safer than building your own in-house AML team, and when, conversely, it makes sense to invest in an internal function. I rely on COREDO’s experience in supporting clients in the EU, the United Kingdom, Singapore and Dubai, as well as on up-to-date research on fintech AML compliance models, regtech solutions and global regulatory trends.

If you plan to launch or scale a financial service in the EU, Asia or the Middle East within the next year, I recommend reading to the end: you will get a practical selection algorithm, an ROI calculation formula, and real scenarios in which AML outsourcing yields not only cost savings but also a strategic advantage.

AML outsourcing vs. in-house: key differences

Illustration for the section «AML outsourcing vs in-house: key differences» in the article «When AML outsourcing is more beneficial than in-house for financial companies»
To avoid getting lost in details, I usually suggest clients start with a simple comparison framework of in-house AML and AML outsourcing across five parameters.

In the in-house vs outsourced AML model, the main argument in favor of an internal team remains a higher level of control and the ability to deeply customize process design for unique products. At the same time, outsourced AML compliance allows quickly establishing compliance with standard AML/CTF frameworks, reducing AML compliance costs and relying on already streamlined workflow automation and case management systems.

AML compliance costs: outsourcing reduces expenses by 30–50%

When a fintech company comes to me at the licensing stage in the EU or Singapore, the first conversation rarely starts with technology. Almost always the first question is: «How much will AML compliance cost us over a 2–3 year horizon?». Here the contrast between in-house AML and AML outsourcing is especially noticeable.

In the in-house model the cost structure includes:

Upfront investment costs: purchase or development of a transaction monitoring platform, sanctions screening modules, CDD/EDD, integrations with core systems.
Maintenance burden: support of IT infrastructure, updates for new regulatory requirements, adaptation to changes in sanctions lists and Travel Rule compliance.
Payroll: in-house AML team, including MLRO, analysts, IT support, regular sector-specific training.
Indirect costs: management time, legal support, participation in inspections and audits.

With AML outsourcing a significant portion of capital expenditures turns into predictable operating payments. The provider takes on:

the platform and its updates (including AI-driven AML modules, sanctions list screening tools, case management systems);
support and development (a typical vendor-handled maintenance scenario);
methodology and monitoring of changes in legislation (covering continuous regulatory updates).

As a result, overall AML compliance costs in a number of projects led by the COREDO team were reduced by 30–50% compared with a plan to build an in-house function at a comparable level of risk and quality of reporting.

Viewed through the prism of AML outsourcing ROI, the internal model often does not reach positive profitability over a 2–3 year horizon for companies with relatively low turnover and unstable transaction flow. For scalable early-stage fintech projects it is more rational to direct capital into product and marketing rather than into capital-intensive AML infrastructure.

Implementation timeline and scalability for fintech

The second key parameter is speed and flexibility. For fintech companies a 6–9 month delay in launching transaction monitoring and sanctions screening literally means a missed market.

In the in-house AML model:

the implementation timeline includes RFP, selection and implementation of the platform, scenario configuration, testing, team training;
at the same time each spike in volumes requires scaling infrastructure and hiring more people, which increases the risk of bottlenecks and operational failures.

In AML outsourcing the typical path is different:

the provider uses already tested Fintech AML compliance models, offers a set of ready-made scenarios tailored to the client’s segments (for example, cryptocurrency services, payment organizations, forex brokers);
adds specific settings (jurisdiction, products, client risk profiles), which allows reducing the launch to 1–3 months;
takes on operational scalability spikes, from seasonal peaks to expansion into new markets – without reconfiguring your internal team.

For COREDO projects in the EU and Singapore it was precisely the operational agility and scalability flexibility of the outsourcing model that repeatedly became the decisive argument in favor of outsourcing: the company increased turnover and the number of transactions severalfold without the need to simultaneously double or triple the AML specialist headcount.

AML outsourcing for fintech and financial companies

Illustration for the section «AML outsourcing for fintech and financial companies» in the article «When AML outsourcing is more profitable than in-house for financial companies»
When I discuss moving to AML outsourcing with clients, I suggest looking at it not simply as a cost-saving tool, but as a strategic decision.

First, you gain the opportunity to make a core business focus shift. Management and key specialists concentrate on the product, geographic expansion, partnerships, rather than endless tuning of compliance frameworks and interpreting regulators’ letters.

Second, you gain access to the mature expertise of regtech AML providers. For many financial companies, maintaining an in-house team equally strong in KNF and GIIF approaches, Asian regulation and Middle Eastern requirements is a very resource-intensive task. The market, however, offers providers for whom AML/CTF outsourcing advantages and deep vendor AML expertise are the core business.

Third, you share infrastructure costs with other clients through infrastructure sharing. This is especially noticeable when it comes to using AI-driven AML modules, complex workflow automation and real-time transaction monitoring across different currencies and jurisdictions.

Outsourcing MLRO services for small and medium-sized fintechs

I’ll single out the topic of MLRO outsourcing separately. For small and medium fintech businesses, finding and retaining a qualified MLRO with experience working in multiple jurisdictions at once is a non-trivial task. The market shows pronounced recruitment challenges for AML specialists and high employee turnover risks even in large banks, not to mention startups.

The MLRO as a Service model solves this problem:

you get an appointed officer who is responsible for interaction with the regulator, oversight of compliance with GIIF guidelines, KNF requirements and other standards;
audit readiness is ensured: register, reports, documentation, justification of the risk model — everything is maintained in a state ready for inspection;
penalty minimization approaches are implemented: from regular internal reviews to adjustments of procedures after legislative updates.

The COREDO team helped clients launch such models during licensing in the EU: using MLRO outsourcing made it possible to meet key regulatory requirements in the absence of a local labor market of the necessary level, and at the same time to create a stable process that was later, if necessary, scaled into a hybrid model (part of the functions in-house, part with an external provider).

AI-driven AML in outsourced solutions

The technological side of AML technology outsourcing is another important advantage. Modern regtech AML providers offer:

AI-driven AML with machine learning in AML to improve the quality of alerts and reduce the share of false positives;
modular regtech solutions: sanctions screening, transaction monitoring, Customer due diligence (CDD) and Enhanced due diligence (EDD), integrable into your existing architecture;
ready integrations with payment gateways, core banking and other systems, which reduces system integration challenges.

Instead of building and maintaining these components independently, a financial company gets access to them within outsourced AML solutions, while issues of updates, optimization and compliance with new regulatory requirements remain the provider’s responsibility. This is especially relevant for players operating in multiple regions at once and forced to take into account divergent requirements for ML/TF risks and Travel rule compliance.

Risks of in-house AML programs and regulatory fines

Illustration for the section «Risks of in-house AML and regulatory fines» in the article «When AML outsourcing is more profitable than in-house for financial companies»
To be frank, most headline-making cases with serious regulatory penalties in recent years were precisely linked to failures of internal control systems: insufficient depth of CDD/EDD, errors in sanctions screening, ineffective transaction monitoring and outdated compliance frameworks.

In an in-house AML team the typical vulnerabilities look like:

internal expertise gaps: especially with rapid business growth or expansion into new jurisdictions;
the difficulty of timely reflecting continuous regulatory updates in processes and documentation;
limited budget for sector-specific training, which leads to uneven quality of case analysis;
insufficient independence of the AML function from business units.

In the case of small and medium businesses these factors are amplified: managers simultaneously deal with product, sales and fundraising tasks, and there simply isn’t enough time for a systematic view on AML risk management outsourcing or restructuring in‑house set-ups.

From COREDO’s practice: in one EU project the client initially chose in-house AML, but after one and a half years received a regulator’s order due to the inadequacy of the compliance frameworks for the current risk profile. As a result, the company had to effectively rebuild the entire model in a few months by engaging an external provider, which cost more than the initial choice of a hybrid or outsourced model.

Data security and loss of control in AML outsourcing

The question of data security risks and “loss of control” naturally arises in almost every discussion of in-house vs outsourced AML. This is a normal concern, and it can be addressed systematically.

Key tools:

strictly defined communication protocols: who, when and in what format gets access to data and the results of checks;
segregation of roles and access rights;
provider obligations on information security, compliance with international standards, encryption, access logging;
contractual mechanisms: liability for incidents, notification procedures, response plan.

In practice, if a provider specializes in AML outsourcing, its data protection standards often turn out to be higher than those of many financial companies at an early stage of development. In COREDO projects we pay significant attention to contractual arrangements and the technical architecture of data transfer so that the client retains strategic control over critical aspects and can audit the provider at any time.

When in-house AML is not viable for fintech

There are several typical situations when betting on a fully in-house AML for a growing fintech project almost certainly leads to excessive costs and increased risks:

Rapid growth in volumes (especially in high-frequency models): transaction monitoring begins to “choke”, and hiring and training staff can’t keep up with the business.
Entering new markets with different requirements for Travel rule compliance, reporting, local registration forms: each new jurisdiction requires separate analysis and process adaptation.
Launching multiple products (for example, payments + crypto services + lending) in tight timeframes.

In these scenarios, AML for fintech is logically built around outsourcing or a hybrid model: external infrastructure and expertise cover the basic and medium risk levels, while the in‑house team focuses on oversight, product-specific features and interaction with the regulator.

Calculation of AML Outsourcing ROI for Financial Companies

Illustration for the section “Calculation of AML outsourcing ROI for financial companies” in the article “When AML outsourcing is more profitable than in-house for financial companies”
To move the discussion from the realm of impressions to the realm of numbers, I usually suggest that clients use a simple AML outsourcing ROI formula:


ROI = (Savings - Outsourcing costs) / Outsourcing costs * 100%

By “Savings” we mean the difference between projected in-house AML costs and the total AML compliance costs under outsourcing for the same period (usually 2–3 years).

A simplified comparison example (in arbitrary currency):

To this basic estimate I recommend adding:

the cost of downtime or delays in product launch due to a lengthy implementation timeline;
the cost of potential regulatory penalties (probability × expected size) in an underfunded in-house setup;
the effect of faster market expansion made possible by using mature outsourced AML solutions.

The COREDO team usually walks clients through this calculation step by step, formalizing assumptions and producing several scenarios — conservative, base, and aggressive in terms of business growth. This gives management a clear picture of how justified investments in an internal function are or how logical it is to shift the focus to outsourcing.

When to choose AML outsourcing instead of in-house

Illustration for the section «When to choose AML outsourcing instead of in-house» in the article «When AML outsourcing is more profitable than in-house for financial companies»
The choice between AML outsourcing and in-house AML rarely comes down to a “black” or “white” option in practice. Most often a hybrid model proves optimal. Nevertheless, there are a number of typical guidelines.

For whom outsourcing almost always makes sense:

SMBs and growing fintech companies with limited budgets and ambitious plans to scale in the EU, Asia, or Dubai;
companies entering several jurisdictions at once and facing divergent requirements for AML/CTF frameworks;
businesses with volatile volumes where scalability flexibility is critical.

When it makes sense to consider in‑house or a hybrid:

large players with stable turnover and unique product logic requiring a high degree of process customization;
companies for which the AML function becomes part of a competitive advantage (for example, complex risk‑scoring models on proprietary data).

How to structure the selection process in practice:

Conduct an audit of current and planned needs: transaction volumes, jurisdictions, regulators, reporting requirements, plans for obtaining licenses.
Assess system integration challenges: which of your IT systems will need to be connected, which data will be transmitted to the provider.
Compare implementation timelines and total costs of the two models, using the AML outsourcing ROI approach described above.
Assess vendor expertise: the provider’s experience in your target jurisdictions, availability of modules for Travel Rule compliance, CDD/EDD, sanctions screening, and support for MLRO outsourcing.
Determine the target level of customization and the allocation of responsibilities between the in‑house team and the provider.

The COREDO team often combines this decision with tasks related to international company registration and obtaining licenses: when structuring a holding in the EU and Asia it makes sense to build the architecture of outsourced AML solutions from the start to avoid costly reboots later.

Scaling AML compliance through outsourcing for fintech

One of COREDO’s characteristic cases: a fintech project that entered the EU and Asian markets with a payment service and crypto functionality.

Originally management planned to build an in-house AML team, but after a joint analysis comparing AML solutions it became clear:
with expected growth in volumes by 3–4 times over two years and simultaneous launches in several jurisdictions, the costs of an internal function and the risks of licensing delays were too high.

The solution developed at COREDO included:

selecting a provider with strong regtech AML modules, support for AI-driven AML, and adaptive case management systems;
using elements of MLRO as a Service to satisfy the requirements of multiple regulators;
configuring high customization vs quick setup: a fast base plus targeted refinements of scenarios for the client’s specific risks.

Result: the company obtained licenses on schedule, avoided AML control orders, successfully passed initial inspections and was able to focus on product development. The end-to-end recalculation showed a reduced probability of regulatory penalties and a significant increase in the company’s valuation by investors thanks to the maturity of its AML compliance model.

Key takeaways and steps

My experience shows: AML outsourcing is more cost-effective and efficient for most financial companies with up-to-mid-size turnover and especially for scaling fintech projects. However, the final decision is always contextual.

To summarize:

Conclusion: for approximately 70% of financial companies with turnover below a certain threshold and ambitions for international expansion, outsourcing or a hybrid model provides up to 40% savings in total costs, accelerates scaling, and improves resilience to regulatory changes.

Practical steps I recommend taking now:

Calculate your AML outsourcing ROI using your actual budgets and growth plans.
Conduct an audit of current CDD/EDD processes, sanctions screening, transaction monitoring, and readiness for audits.
Create a shortlist of providers with strong regtech AML expertise and the option for MLRO outsourcing; carefully assess vendor expertise for your target markets.
Plan integration architecture and communication protocols in advance to ensure control over risks and data.

If you need an applied analysis of your specific model and jurisdictions, the COREDO team is ready to conduct a targeted audit of your existing or planned AML solutions in the EU and Asia and help build a resilient, economically justified, and scalable AML compliance model for your business.