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AI Tops the Chart as the Forefront Tool in Anti-Money Laundering Efforts

Artificial intelligence (AI) has emerged as the preferred choice for battling money laundering challenges, according to The State of Global Anti Money Laundering Compliance Report 2023 conducted by Feedzai.

The report from the financial crime and risk management solutions company provides insights from compliance professionals across the globe, shedding light on evolving threats and opportunities in the anti-money laundering (AML) arena.

A significant revelation is that 46 per cent of these professionals have voiced concerns over the rise of complex money laundering strategies, especially those employing generative AI. This has escalated the threat from generative AI-linked technology to be the primary challenge in 2023, surpassing concerns related to regulation and cryptocurrency, as well as blockchain, which were prominent in 2022.

Cryptocurrency laundering remains a pressing concern, even as newer challenges emerge. Fifty-three per cent of survey participants noted that cryptocurrency transactions dominate the money laundering activities they monitor. Malevolent actors exploit the built-in anonymity and decentralisation of cryptocurrencies to hide the roots of illicit funds, amplifying the challenges of detection and oversight.

On a positive note, as malevolent actors tap into advanced technologies, the guardians of financial integrity are also not far behind. A sizable 33 per cent of AML professionals are backing AI and machine learning as the primary tools to counteract money laundering.

Furthermore, among those who have integrated AI, 60 per cent affirm its effectiveness in enhancing AML processes within their establishments.

Future outlook

Gazing into the future, a majority (51 per cent) anticipate AI and machine learning to be the backbone of AML and KYC (know your customer) frameworks. Given AI’s capability to instantly sift through expansive data volumes, it’s becoming an invaluable asset for analysts to spot and neutralise threats. Enhanced KYC procedures, fewer false alarms, and cost-effective compliance procedures are just a few of the benefits expected from AI’s deeper integration.

Offering his perspective, Nick Parfitt, principal AML SME at Feedzai, remarked: “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.

He also highlighted that banks and 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 by creating a 360-degree view of customer risk that addresses the entire lifecycle of financial crime and compliance, helping to stop criminals in their tracks before they can do any damage .”

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