At the Financial Action Task Force’s (FATF) recent Private Sector Consultative Forum, the organization’s President, Mr. Juan Manuel Vega-Serrano, held discussions on the state of FinTech and RegTech.  Private sector participants shared their experiences and challenges in this area and highlighted that artificial intelligence (AI) and machine learning (ML) could assist with more effective monitoring and screening systems.  To highlight the importance of FinTech and RegTech, FATF will host an event in the United States in late May 2017 to further engage the private sector in FATF’s ongoing efforts in the AML/CTF community.

As discussed in previous QuantaVerse blog posts, AI and ML drive efficiency and solve compliance problems for financial institutions (FIs).  Existing transaction monitoring (TM) and Know Your Customer (KYC) systems are siloed which result in ineffective sharing of Lines of Business (LOB) data.  TM systems operate on rules-based scenarios that are largely static and require constant tuning to be effective.

An AI and ML solution can easily be implemented to supplement existing TM and KYC systems and provide laser-focused analysis of an institution’s data.  A traditional TM system, enhanced with AI and ML, drastically reduces the number of false positive alerts, which will allow investigators to spend more time on relevant and high-risk cases.

Through AI and ML, the compliance and business teams can work more closely to predict where illicit transactions might occur next while mitigating previously undetected anomalous behavior.  AI and ML can also assist compliance and business teams to quickly identify suspected anomalous behavior as legitimate transactions through the analysis of related customer activity and predictive analysis.  This will result in less de-risking and an improved customer experience.

FATF’s focus on AI and ML technologies as a tool in the fight against money laundering and terrorist financing is a sign that global regulators may begin to place greater emphasis on AI-powered solutions as a required tool in every institution’s compliance toolbox.


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