All financial institutions across the world are finding addressing the issue of money laundering to be a major challenge as methods used by criminals for stealing money are getting more complex and sophisticated.
Consequently, Anti-Money Laundering (AML) measures are now required to be implemented. In order to identify and detect money laundering activities, which require dealing with a large amount of customer data, AML professionals are turning to AI and machine learning.
AI completes AML tasks more quickly than a human worker, and through machine learning, it has the capacity to adapt to new threats and identify novel money laundering schemes. It guarantees that financial institutions can quickly adapt to various regulatory environments.
When a consumer’s transaction information is included in an AML scheme, AI and machine learning algorithms examine the behavior to form predictions about the future and conceptions about that consumer.
Customer due diligence and know your customer (KYC) systems can now be completed more quickly, thoroughly, and broadly thanks to AI systems.
Effectively locate and gather information from a wider range of external sources, such as watch lists and sanction lists, and develop a factual profile of the client.
Recognize valuable owners of customer entities more quickly and effectively by using external data.
Amplify the density of AML measures among customers by gathering and reconciling customer data across internal systems to eliminate duplication and errors.
Instantaneously add relevant information from customer risk profiles or data from outside sources to suspicious activity reports.
Beyond developing customer risk profiles, there are additional crucial steps. The AML process calls for the identification and analysis of unstructured data as part of tracking transactions, screening PEP, screening sanctions, and monitoring media. Every financial institution needs to try to use unstructured data to identify people’s professional, social, and political lives by looking at a variety of external sources like media, social networks, public archives, etc. In these cases, AI aids the institution in identifying unstructured data. AI aids the institution in prioritizing and categorizing data after it has been gathered and analyzed to help with risk management.
By creating reports and automatically populating them with accurate data, AI can help with the reportage of suspicious activity. SARs go through an internal reporting process after submitting their reports to the authority. The SAR process can be simplified by AI technology because algorithms can produce automated reports with precise data and transform that data into an understandable, standardized language to reduce bureaucratic red tape. AI speeds up and improves the effectiveness of an institution’s AML reporting because of standardized language and terminology.
Because the AML system is intricate and time-consuming, it is advantageous to include AI in an AML system because it increases speed and efficiency. The amount of noise or false positives, which are brought on by incomplete or insufficient data or overly sensitive AML steps, is one of the process’s biggest obstacles. In these situations, AI systems are crucial because they significantly reduce the amount of noise produced during the AML process.
AI helps the institution gain a deeper understanding of customer transaction patterns and enables them to eliminate inaccurate and unnecessary alerts that increase costs for the institution and inconvenience customers. AI and machine learning tools help AML staff members better prioritize and direct the most important money laundering notifications by reducing noise. By doing this, AI helps combat financial crime more successfully.