Leveraging AI to Combat Financial Crime

Thomson Reuters Article

At the recent LegalWeek 2020 conference in New York, our Tim Mueller, partner at the Global Investigations and Compliance practice at Guidehouse was invited to join experts from Vanguard, Covington, ZeroFox and Pillsbury Winthrop Shaw Pittman to discuss how artificial intelligence (AI) is being integrated into RegTech solutions for enhanced anti-money laundering (AML) compliance and screening. The panelists also explored AML trends in 2020 and shared a case study where AI has been successfully deployed in combating financial crimes. Thomson Reuters Legal Executive Institute provided a summary on the discussion. 

Regulators are wading in on how compliance departments use AI. In fact, we are at a point where some of these algorithmic applications require financial institutions to get prior written approval from regulators, said Tim Mueller. During exams, Bank Secrecy Act (BSA) and AML programs are being examined, and financial institutions are expected to demonstrate the AI functions being use, explain how they work, and even defend the work product to the regulator. Some defenses have withered from the regulator’s findings and from AI bias.

During the discussion, our Tim Mueller also shared a case study on Intelligent Segmentation, diving into the pitfalls of current approaches to AML compliance and how AI solves for it. Frequently, normal banking behavior is identified as suspicious, and this includes large bank deposits and rapid money movement from one bank to another. Despite billions of dollars spent on traditional monitoring (which often ends with a human internal investigator), 95% of system-generated alerts are “false positives,” said Mueller.

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