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Financial institutions turn to AI and ML to aid anti-money laundering efforts

By Catherine Knowles, 12 Aug 2021

A third of financial institutions are accelerating their artificial intelligence (AI) and machine learning (ML) adoption for anti-money laundering (AML) technology in response to COVID-19.

Meanwhile, another 39% of compliance professionals said their AI/ML adoption plans will continue unabated, despite the pandemic’s disruption.

These industry trends and others are revealed in a new AML technology study by SAS, KPMG and the Association of Certified Anti-Money Laundering Specialists (ACAMS).

The report, 'Acceleration Through Adversity: The State of AI and Machine Learning Adoption in Anti-Money Laundering Compliance', and a complementing survey data dashboard examine insights provided by more than 850 ACAMS members worldwide.

AI and ML have emerged as key technologies for compliance professionals as they look to streamline their AML compliance processes to fight financial crime and money laundering.

More than half (57%) of respondents have either deployed AI/ML into their AML compliance processes, are piloting AI solutions or plan to implement them in the next 12-18 months.

The report also finds that it’s not just the largest financial institutions leading the charge on technology adoption. In fact, 28% of large financial institutions, those with assets greater than $1 billion, consider themselves innovators and fast adopters of AI technology. However, 16% of smaller financial institutions (those valued below $1 billion) also view themselves as industry leaders in AI adoption.

Regardless of institution size, the pressure on banks to meet COVID-19’s disruption head on, while boosting accuracy and productivity, is the likely impetus to the industry’s accelerating use of advanced analytics for AML, the researchers state.

The two primary drivers of AI and ML adoption, according to respondents, are to: improve the quality of investigations and regulatory filings (40%), and reduce false positives and resulting operational costs (38%).

ACAMS chief analyst and director of editorial content Kieran Beer says, “As regulators across the world increasingly judge financial institutions’ compliance efforts based on the effectiveness of the intelligence they provide to law enforcement, it’s no surprise 66% of respondents believe regulators want their institutions to leverage AI and machine learning.

“While many in the anti-financial crime world - the regulators and financial institutions alike - are just coming up to speed on these advanced analytic technologies, there’s clearly shared hope that these tools will produce truly effective financial intelligence that catches the bad guys.”

KPMG principal US solution leader for financial crimes and America forensic technology services, Tom Keegan, says, “Seeing a strong percentage of smaller financial organisations label themselves industry leaders debunks the myth that advanced technological solutions beyond the reach of smaller financial organisations.

“With both smaller and larger organisations subject to the same level of regulatory scrutiny, it’s important that these numbers continue to rise.”

SAS director of financial crimes and compliance David Stewart also commented. He says, “The radical shift in consumer behaviour sparked by the pandemic has forced many financial institutions to see that static, rules-based monitoring strategies simply aren’t as accurate or adaptive as behavioural decisioning systems.

“AI and ML technologies are dynamic by nature, able to intelligently adapt to market changes and emerging risks – and they can be integrated into existing compliance programs quickly, with minimal disruption.

"Early adopters are gaining significant efficiencies while helping their institutions comply with rising regulatory expectations.”

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