In an earlier post, “Can You Handle Big Data in Financial Compliance?” we discussed ways that using big data overwhelms and complicates compliance requirements for companies. Building on that content, we will explore how artificial intelligence (AI) helps companies remain compliant with laws and regulations.
Although financial institutions have been adding tens of thousands of compliance officers to keep up with changing regulations, many institutions are saving time and money by replacing officers with AI technology. AI can increase efficiency, decrease false-positives and use resources more effectively than humans can for know-your-customer checks, sanctions list monitoring, anti-money laundering programs, billing fraud oversight and other compliance requirements.
Natural Language Processing System
NextAngles, a company using AI to help financial institutions monitor compliance, created a natural language processing system that reads compliance regulations and reassembles them into rules the computer understands. The system goes through financial transactions to determine which are compliant more quickly than a human could. For example, large financial institutions may sort through 300,000 transactions of $10,000 or greater each month as part of their anti-money laundering procedures. Although many false-positives may show up, there may be 1,000 cases that need further investigation. Since each investigation would take a compliance officer several hours, it’s more efficient having AI handle the work in a much shorter period.
Risk Assessment Process
In March 2016, law firm Baker McKenzie released results from their survey of 424 senior executives from fintech and financial services companies regarding their use of AI. Almost half the respondents anticipated using AI in their risk assessment process within the following three years. Approximately 30 percent said they’d use AI in know-your-customer and anti-money laundering monitoring processes. Slightly more than one-fourth of respondents stated they’d include AI with regulation and risk compliance.
Because financial institutions must deal with information from various sources to quickly comply with several hundred changes in regulations each month, institutions need a system that is auditable and shows who performed each activity and when. Because each institution requires information delivered in an individual manner, and AI can be highly specific to each context, AI can easily handle anti-money laundering monitoring and know-your-customer investigations. Also, AI is scalable for different sized financial institutions, depending on their needs and budget. In addition, AI is configurable, intuitive and logic-driven, and can handle structured, semi-structured or unstructured data, all of which are involved in maintaining compliance.
AI is innovating how financial compliance is being handled. For more assistance with all your compliance needs, reach out to the anti-money laundering recruiters at CarterWill Search and Flex today!