AI is the preferred solution to tackle financial crime according to financial crime and risk management solutions provider Feedzai.
The report found that 46% of AML professionals are concerned about increasingly sophisticated money laundering techniques, including generative AI. The threat from generative AI and linked technology is now the top challenge for AML professionals. In the process, it overtakes regulation, cryptocurrency and blockchain, the top threats cited in 2022.
Despite no longer occupying the top spot, crypto still remains front of mind for AML professionals. 53% of those surveyed said that the money laundering activities within their scope are predominantly linked to cryptocurrency transactions. Cryptocurrencies’ anonymous and decentralised nature is being exploited to conceal the origins of illicit funds. This exacerbates the challenges in detection and monitoring.
As criminals utilise increasingly sophisticated technology, so too do those seeking to protect consumers. A third (33%) of AML professionals say that AI and machine learning are the most effective method for preventing money laundering. Of those already adopting AI, 60% said that the technology has already been effective in driving efficiencies in AML processes.
AI/ML: the future of AML and KYC programmes
Looking ahead, over half (51%) of respondents believe that an increased use of AI and machine learning is the future of AML and KYC (Know Your Customer) programmes. With the potential to instantly analyse huge data sets, AI is already helping investigators identify bad actors and diffuse threats. AI integration will improve KYC processes, reduce false positives and also offers a reduced cost burden on compliance professionals.
Nick Parfitt, Principal AML SME at Feedzai said: “Fraudsters are capitalising on fast-developing technologies to trick existing AML programmes, in many cases using generative AI to their advantage. Our latest report reiterates the demand from AML professionals for their organisations to adopt AI in combination with human insight as a defensive weapon to improve their compliance process and efficiencies.
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“Financial institutions are sitting on a wealth of data that they can use to better protect their customers and business. By taking a RiskOps approach, they can put this data to good use. Creating a 360-degree view of customer risk addresses the entire lifecycle of financial crime and compliance. This helps to stop criminals in their tracks before they can do any damage.”