{"id":6987,"date":"2019-06-17T20:40:41","date_gmt":"2019-06-17T20:40:41","guid":{"rendered":"https:\/\/www.fintechnews.org\/_\/?p=6987"},"modified":"2019-06-17T22:43:52","modified_gmt":"2019-06-17T22:43:52","slug":"how-artificial-intelligence-is-fighting-financial-crime","status":"publish","type":"post","link":"https:\/\/www.fintechnews.org\/_\/how-artificial-intelligence-is-fighting-financial-crime\/","title":{"rendered":"How artificial intelligence is fighting financial crime"},"content":{"rendered":"

By<\/span>\u00a0Soumik Roy<\/a><\/span><\/p>\n

WITH cross-border communications soaring and digital transactions becoming more rampant, fighting money laundering has become more complicated than it previously was.<\/p>\n

As a result, financial institutions are experimenting with all kinds of technology to safeguard their customers and block out bad actors. Increasingly, in the fight against money laundering, artificial intelligence (AI) and more specifically, machine learning (ML)<\/a>, seems to be providing a strong defense.<\/strong><\/p>\n

Whether you look at international giants such as\u00a0HSBC<\/a>\u00a0and\u00a0Standard Chartered Bank<\/a>\u00a0or regional banks such as Maybank and\u00a0DBS<\/a>, everyone is collaborating with fintechs or developing their own in-house AI\/ML solution to fight financial crime.<\/p>\n

Banks, due to their very nature, have access to tremendous volumes of data. Hence, with AI\/ML on their side, they\u2019re able to quickly build models and frameworks that learn what \u201cordinary and regular\u201d looks like and pinpoint transactions that should be <\/strong>scrutinised further.<\/strong><\/p>\n

The number of\u00a0non-cash transactions<\/a>\u00a0in Asia is expected to reach 277 billion by 2020, according to the World Payments Report 2017 \u2014 and there\u2019s no telling which of those are being initiated by bad actors intending to launder money using new and innovative schemes.<\/p>\n

Being automated, for the most part, it helps make executives much more efficient and allows the bank or financial institution to pay attention to every single transaction despite the large volumes.<\/p>\n

EY, for example, helped European financial services giant Nordea build a model that helped weed out false positives and put the spotlight on transactions that actually deserved immediate attention.<\/p>\n

\u201cLike the algorithms that help online retailers target customers according to their taste in brands, the model we built with Nordea became more insightful and accurate as it learned how to interpret the signals that indicate criminal activity, analysing vastly greater quantities of data, more reliably, than existing people or processes could,\u201d explained\u00a0EY executives<\/a>\u00a0through a case study.<\/p>\n

Why use AI to fight financial crime?<\/h2>\n

\u201cBy using such techniques and the power of automation, compliance teams can investigate true compliance risks and suspicious cases, reduce manual, and repetitive tasks and perform higher value work such as analysing the outcomes and quality to ensure policies and procedures are substantial,\u201d Deloitte Southeast Asia Financial Crime Compliance Leader Radish Singh told\u00a0Tech Wire Asia<\/em>.<\/p>\n

\u201cWith technology used more effectively and innovatively, humans can focus on the material risks.\u201d<\/p>\n

According to Singh, with digital disruption, technological revolution, open APIs, and emerging typologies, there is a widening gap between where a financial institution\u2019s financial crime compliance programme is, versus where it needs to be.<\/strong><\/p>\n

PwC<\/a>\u00a0recently studied the AI readiness of financial institutions with respect to financial crime and found that part of the problem is that business leaders don\u2019t really know where to start, or conversely, are thinking too far ahead to techniques that are feasible but not practical yet.<\/p>\n

In fact, PwC\u2019s consultants believe that most financial institutions would be better served if they focused on what\u2019s possible over the next one to two years, rather than what AI could do five years down the line.<\/p>\n

In the short term, experts believe that AI could be used to augment processes and track transactions that escape set benchmarks \u2014 when observed in isolation or when seen in combination with other related transactions \u2014 aiding compliance professionals within the financial institution.<\/p>\n

\u201cWhen it comes to business efficiency, using new technologies such as machine learning has tremendous potential to reduce manual processes, and even streamline repetitive tasks that often weigh compliance and operations teams down.<\/p>\n

\u201cThis alleviates the cost burden and makes compliance a more meaningful exercise. In addition, machine learning can improve a financial institution\u2019s accuracy in detecting money laundering and terrorist financing risks,\u201d said Deloitte\u2019s Singh.<\/p>\n

 <\/p>\n

To read more about cybersecurity we recommend you to read this: Ping Identity CTO\u2019s cybersecurity predictions for 2019<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Soumik Roy WITH cross-border communications soaring and digital transactions becoming more rampant, fighting money laundering has become more complicated than it previously was. As a result, financial institutions are experimenting with all kinds of technology to safeguard their customers and block out bad actors. Increasingly, in the fight against money laundering, artificial intelligence (AI) and […]<\/p>\n","protected":false},"author":1,"featured_media":8061,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[563,2,20,51],"tags":[],"class_list":["post-6987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-machine-learning","category-fintech","category-artificial-intelligence","category-cyber-security"],"yoast_head":"\nHow artificial intelligence is fighting financial crime - Fintech News<\/title>\n<meta name=\"description\" content=\"\u201cWhen it comes to business efficiency, using new technologies such as machine learning has tremendous potential to reduce manual processes\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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