Applying Artificial Intelligence Technology To Reduce AML Risk for Global Financial Institutions

As financial institutions and FinTechs increase use of AI and data analytics to improve their services, government agencies need to ensure that our support, policies and regulations are attuned to developments and remain supportive of these new technologies. — Dr. David Hardoon, Chief Data Officer, Monetary Authority of Singapore

In recent years, financial institutions have navigated through a rising tide of regulatory obligations and compliance requirements related to anti-money laundering (AML), counter-terrorist financing (CTF), Bank Secrecy Act (BSA) and Know Your Customer (KYC). 

In response to increased scrutiny, and the risk of significant fines and enforcement actions, these covered institutions have spent billions of dollars in an effort to be compliant and thwart criminals from laundering their illicit proceeds through the global banking industry.

Maintaining both effective and efficient AML programs has proven elusive for financial institutions due to a reliance on legacy technology solutions and a seemingly ever-increasing investigator case workload. Artificial intelligence (AI) and machine learning, however, hold the key to helping institutions reduce regulatory risk, and improve the AML investigation process.

An effective AI-based AML solution enhances existing compliance systems to catch the false negatives that embody financial and reputational risk, drive out false positives that represent an estimated 95 percent of the alerts generated by transaction monitoring systems and increase investigative efficiency. With vast amounts of financial crimes going unalerted and trillions of dollars in laundered money still channeling through the global banking system, AI and machine learning offer the opportunity to move toward a new
standard of AML.

The application of AI technology is a logical solution in solving the problem of AML risk for financial institutions. Modern AI systems have progressed to the point where large volumes of transactional and other sources of data can be culled, consolidated, analyzed and scored for risk so that investigators can make more accurate SAR-filing determinations. The time is now for financial institutions to confidently leverage the proven technology of AI in their AML ecosystems.