AI Can Help Prevent Financial Crime

Many of the existing AML solutions are struggling to keep up with increasingly burdensome regulations. Most of the AML technologies are rule-based. And as more laws are applied to the mix to counter fraud, more cases are flagged for further review.

Fremont, CA: Global cases of money laundering are on the rise. With every new legislation put in place to tackle financial crimes, criminals are creating ever more complex workarounds, pushing financial institutions (FIs) to come up with new anti-money laundering (AML) solutions year after year.

Artificial Intelligence (AI) is emerging as one of the most powerful resources to help banks deter and fight financial crime. This is fantastic news, as less than 0.2 percent of the money washed is actually retrieved.

The Latest AML Technologies Issue

Many of the existing AML solutions are struggling to keep up with increasingly burdensome regulations. Most of the AML technologies are rule-based. And as more laws are applied to the mix to counter fraud, more cases are flagged for further review.

AML monitoring systems produce more than 95% false positives because rules-based assumptions are far from reality, and data-related bugs can easily interrupt AML program data.

AI can help identify hidden patterns easily missed by its human counterparts and can generate accurate segments that lead to better rules/thresholds for the AML software. This significantly decreases the rate of false positives and saves time and money previously spent investigating cases.

Learning how to trust AI

What is the trend towards using AI-driven technologies to detect fraud in the next ten years? Let's take a look at where we are now.

Fear and mistrust of rapidly emerging AI technology are among the main barriers to make AI the best option to avoid money laundering. But even if banks are initially apprehensive about trusting these newer technologies, massive profit losses are the trend that will inevitably push reform.

In a few short years, those who can't fathom Alexa's invasive presence in their homes today will learn to embrace her because they won't be able to work without her or any related technology.