Expert opinions: AML in the digital age

In the digital age, money laundering and financial crime has grown rapidly as regulation and bank processes struggle to keep pace with the rise in criminal innovation. As a result, financial institutions need to respond quickly and efficiently, by utilising the right technologies and strategies within their AML toolkits.

In our new video series, we asked industry experts to share their views with Banking Circle on AML, Artificial Intelligence, and fighting financial crime amid the increasing speed of transactions today.

Guest experts:

  • Dave Burns, Chief Revenue Officer, Napier AI
  • Denisse Rudich, CCO & Co-Founder, ElementaryB Advisory
  • Jane Jee, CEO, Kompli-Global
  • Samantha Sheen, Founder & Director, Ex Ante Advisory

You can read more and watch the experts’ videos below, or download our AML whitepaper for a deep-dive on the topic.

Dave Burns, Chief Revenue Officer at Napier AI: Is Artificial Intelligence all hype?

According to Napier AI’s CRO, absolutely not. “There’s huge potential for what advanced capabilities and Artificial Intelligence [AI] can bring to the area of AML,” Dave said.

From pattern recognition to behaviour detection, there are a number of extremely challenging functions that AI can help solve which are all a critical part of a modern AML toolset. “The challenge, the opportunity, is really to have AI deliver value for the business and not simply find more ‘anomalous activities’ for the operational teams to have to work through,” Dave explained.

According to the CRO, using AI can bring greater benefits than just enhancing compliance and operations: in fact, data on customer behaviour can be utilised by functions across the business.
But there are still some challenges in using AI as part of an AML strategy – particularly when it comes to the increased speed of transactions today.

“The requirement to make those sub-second decisions about [whether to] block or pass from an upfront validation standpoint is much more critical than it used to be, especially with the ever-changing sanctions landscape that exists in the world today,” Dave said.

With the requirement to very quickly make decisions around approving or denying instant payments, there is a “tremendous” amount of stress put on what are often antiquated systems, he went on to say. Institutions that fail to keep up-to-date with the latest capabilities in processing and monitoring payments can end up facing delays, which causes customer dissatisfaction and ultimately lost revenue.

“So, there’s a major business imperative to upgrade and update their systems to be able to take and deliver to the capabilities of sub-second response times for instant payments.”

Watch Dave’s full response below.

Denisse Rudich, CCO & Co-founder at ElementaryB Advisory: What is the impact of faster and real-time transactions?

With the advent of faster and instant payments, we’re seeing transactions moving incredibly quickly, which is impacting transaction monitoring, according to Denisse.

“I do think we need to move beyond rules-based transaction monitoring, and maybe look at [a] more behavioural type of transaction monitoring with AI supporting it, and maybe some network analysis built on top of that to actually be able to cope with the advent of faster and instant payments,” Denisse explained.

But on top of using the right technologies, regulation and collaboration plays a key role, the CCO argued, pointing to the European Parliament’s 5th Anti‑Money Laundering Directive, which enhances cooperation and information sharing. According to Denisse, there still remains a need for better information sharing between institutions and across borders in order to tackle money laundering.

“I think it is essential that we have cross-country collaboration,” she explained. “Maybe we could start in-country and then go cross-country to build trust, and then kind of recreate the model on a global basis, because it’s not possible to tackle a stateless, nameless enemy in silos. Everybody has a piece of the puzzle, and it somehow has to come together.”

Watch Denisse’s full response below.

Jane Jee, CEO at Kompli-Global: Is Artificial Intelligence all hype?

“It absolutely isn’t, no question about it,” said the CEO of Kompli-Global. “AI is now providing banks with huge benefits in terms of enabling them to reduce false positives, for example, to obtain a more holistic view of their customers and also to reduce their costs in the process.”

While we’re not yet at the point in which AI and automation can fully replace humans – we still require human judgement to make decisions on issues such as risk appetite, for example – AI can identify patterns, make decisions and learn from data far more quickly than a human being can, Jane said. “The point is that AI can give you a lot better information to make your risk assessment. So, there’s no doubt in my mind that the use of AI will become very common place in the pretty near future.”

One of the biggest obstacles to preventing financial crime in the current landscape is the lack of ability to share data, according to Jane, who highlighted the need for better collaboration. “I would like to see there being less discussion about the obstacles to data sharing and more discussion about facilitating it, particularly in relation to the issues with data protection, and the fact that data protection shouldn’t prevent you if your objective is to prevent financial crime.”

Watch Jane’s full response below.

Samantha Sheen, Founder & Director at Ex Ante Advisory: What is the impact of faster and real-time transactions?

The rise of instant payments and the speed at which consumers today expect to transact is going to prompt wholesale change when it comes to preventing financial crime, according to Samantha.
“I think it’s going to require that AML rethink itself as a control framework and prevention strategy,” she said, adding that the current framework is likely become no longer fit for purpose in the face of unprecedented change and speed.

“It will require that our regulators, as well as other stakeholders including enforcement, start working a lot smarter instead of just harder, and really [start] thinking how to design those regulatory frameworks to have the agility needed to adjust to that fast-paced change,” Samantha explained.

While in theory, real-time transaction monitoring would be the ideal response, that would prove extremely challenging programmatically and operationally in practice. “I think the real challenge going forward, if that is to become part of our ecosystem, is, how do we respond in the right way and not find ourselves drowning, as we have historically, in lots of false alerts and no real value to them.

“Without a doubt, AML really does have a strategic role, and I think in some ways we’ve become our worst ambassadors in this respect – we focus too much on being the ‘Doctor Nos’ and not on being the enablers of the business.

“I think we have a really, really vital transition that needs to happen in the next few years, whereby we show what the cost saving is by stopping people at the door.”

Watch Samantha’s full response below.