Is AI the game-changer for streamlining anti-money laundering compliance?

Issue 6 2023 Financial (Industry), Security Services & Risk Management


James Saunders.

In the aftermath of South Africa's recent grey listing by the Financial Action Task Force (FATF), companies are now confronted with the imperative to address eight identified strategic deficiencies, while simultaneously reducing their financial crime risk through anti-money laundering (AML) compliance processes. These challenges, notorious for their potential cost and time commitments, underscore the complexity of achieving full compliance. It is little wonder that two-thirds of businesses are charting a course towards heightened technology investments to wage war against financial crime and reinforce compliance.

According to James Saunders, CTO and Co-Founder at RelyComply, an end-to-end platform specialising in KYC (know your customer), AML, and CFT (countering the financing of terrorism); artificial intelligence (AI) is swiftly emerging as a potent tool to revolutionise antiquated, manual risk-mitigation methods. “This technology brings precise data-driven insights to the table that are markedly less susceptible to human error, although human involvement remains irreplaceable for success.”

Elevating AML Through AI

He explains that AI serves a dual purpose within AML compliance protocols: task automation and advanced data analysis, with the first application centring on streamlining time-consuming tasks. "For instance, AML analysts can harness automation to summarise documents, gauge messaging sentiment, or extract significant adverse media. It also aids in verifying customer information and tracking interactions over time. This approach can often be more cost-effective than relying on off-the-shelf tools, which may or may not outperform their human counterparts."

As for the second application, Saunders underscores AI's prowess in processing vast datasets to discern patterns and flag anomalies. "No human can rival a computer's innate data processing capabilities, which prove invaluable for transaction monitoring and synergy with a company's customised datasets. By assigning roles based on what AI can automate and where human intervention is necessary, AML and CFT processes could be significantly streamlined."

Understanding AI risk

He acknowledges that AI's evolution comes with its own set of challenges. "Evaluating how AI, at various maturity levels, fits into existing business processes is no straightforward task. This is because traditional AML processes often rely on rules-based systems that can miss errors or trigger 'risky' data flags that are not substantiated (resulting in false positives). Around 95% of system generated alerts are reported as ‘false positives’, potentially leading to stringent regulatory actions, real-world repercussions, and damage to professional reputations.”

"While AI has seen initial use in low-risk cases, its application for AML compliance is far from simplistic," adds Saunders. "Misguided use of AI in AML compliance could, at worst, raise concerns about customer understanding and erode trust in financial systems. For example, facial recognition technology has exhibited biases in race and gender identification. AI algorithmic bias could perpetuate this by generating incorrect risk profiles for customers based on unrelated fraudulent activities within their jurisdiction."

"Though AI offers significant advantages in AML compliance, firms must possess a thorough understanding of its potential, necessitating input from AI specialists to make informed decisions about its implementation," he highlights.

AI and Humans: A synergistic approach

When it comes to the collaboration between AI and humans to ensure more dependable AML compliance, Saunders observes that AI can surpass the confines of a single metric. “It can identify the context and characteristics of specific transactions, potentially predicting future criminal activity based on learned patterns. By effectively tagging and indexing customer or transaction data, AI enables humans to visualise crucial information that might be overlooked while minimising the risk of false positives."

"AI-backed technology accelerates data processing, enhances risk comprehension, and provides immediate audit evidence. However, it ultimately falls to a compliance officer armed with the correct financial data to make critical decisions. Both humans and AI tools strive to achieve the same objectives, each reinforcing the other."

"AI, on its own, may not be a silver bullet, but a revamped compliance solution driven by automation and advanced data analysis could be a game-changer in the battle against money laundering when coupled with experts in the field," concludes Saunders.




Share this article:
Share via emailShare via LinkedInPrint this page



Further reading:

Client satisfaction boosted by 85% at Thungela Mine
Thorburn Security Solutions News Security Services & Risk Management Mining (Industry)
Thorburn Security, a division of Tsebo Solutions Group, has announced its recent collaboration with Kwa-Zulu Natal security company, Ithuba Protection Services, as part of its Enterprise Supplier Development (ESD) initiatives across Africa.

Read more...
Migrating to the cloud? Beware the many hurdles
IT infrastructure Security Services & Risk Management
While there are undoubtedly many benefits, there are also numerous hurdles to cloud adoption. Some of the biggest challenges revolve around managing cloud spend, understanding the cost components of cloud infrastructure, and how those costs can scale.

Read more...
Key strategies for businesses in the face of cyber threats
Cyber Security Security Services & Risk Management
Businesses face severe financial and reputational consequences due to data breaches and daily website hacks, and not all organisations are adequately prepared to combat these escalating threats.

Read more...
FutureBank and IDVerse partner to fight cybercrime
Cyber Security Financial (Industry)
Generative AI is breeding different fraud types, and cybercrime is predicted to become the biggest economy in the world in the next 18 months. FutureBank and IDVerse have joined forces to keep their customers safe.

Read more...
Protecting South African systems through XDR cybersecurity
Cyber Security Security Services & Risk Management
Carlo Bolzonello, Country Lead for Trellix South Africa, discusses how the country can protect its valuable digital assets through the artificial intelligence-enabled Extended Detection and Response (XDR) cybersecurity approach.

Read more...
[Sponsored] Protecting Against Ransomware Attacks: Lessons from Recent POPIA Fine
Cyber Security Security Services & Risk Management
According to Sophos' most recent ransomware report, an alarming 78% of the South African organisations that Sophos surveyed experienced ransomware attacks in the past year.

Read more...
Kaspersky launches Professional Services Packages for SMBs
News Cyber Security Security Services & Risk Management
Kaspersky has announced the launch of a range of Professional Services Packages for SMBs, offering tailored support products that help customers get the most out of their cybersecurity resources.

Read more...
AI-driven drones unleash new opportunities and risks
IT infrastructure Security Services & Risk Management
As AI-driven technologies continue to evolve, the incorporation of AI in drone capabilities has become a significant point of interest for many drone operators.

Read more...
Six cybersecurity mistakes to avoid
Cyber Security Security Services & Risk Management
Safeguarding sensitive data and maintaining robust cybersecurity practices has become paramount for businesses of all sizes, with the global costs of cybercrime expected to reach US$13 trillion within the next five years.

Read more...
Has your business planned for the worst?
Editor's Choice Cyber Security Security Services & Risk Management
Incident response is a specialised part of security, like a hospital's intensive care unit: IR kicks in when the organisation detects a breach of its systems to stop criminals from doing more damage.

Read more...