Regulatory pressure, fintechs push AI into the laundering fight

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While historically AML compliance has been relatively slow in adopting emerging technologies, recent years have seen a significant shift.

As financial institutions deal with a barrage of suspicious activity reports and address the influx of geopolitical sanctions, AML is speeding up technology adoption with a greater emphasis on ROI, not just appeasing the regulators.

Recently, regulators have taken a critical look at anti-money-laundering controls, handing out significant fines to FIs that are found to be lacking.

And, as the financial crime function that is perhaps most customer-facing, fraud prevention is another area that benefits from AI and machine learning, as it continues to be challenged with a host of new risks such as P2P payments, new payment rails and faster payments. FIs are pressed to innovate more quickly than they ever imagined as the challenger fintechs and next-generation providers attack their market share. This places an ever-increasing burden on financial crime programs to leverage emerging technologies.

Banks and regulators alike are embracing new technologies to fight financial crime, protect customers and avoid reputational risk. Regulators are beginning to work directly with technology experts to gain a better understanding of the technologies available to fight financial crime today, become experts themselves and find the right balance among emerging technologies, burdensome regulation and cost. This will allow them to find a path forward for both regulators and FIs.

As FIs continue to become comfortable with moving many of their financial crime fighting efforts to the cloud, a new paradigm is emerging. Making complex technology easy to use, understand and explain by both FIs and regulators is something that the industry must work toward to build and conquer the next frontier in fighting financial time.

But no matter what financial crime road map an FI prepares itself to adopt, having an experienced and diverse team examining the potential as well as the pitfalls of emerging technologies is critical to create a stumble-free, cost-effective integration of today’s latest and greatest technology.

Chad Hetherington

Chad Hetherington

Chad Hetherington is global vice president of professional services for NICE Actimize.

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