Financial crime has risen during the pandemic, with criminal opportunists taking advantage of the unprecedented situation and disruption caused by COVID-19. With the attacks still coming as everyone lives are turned upside down, many are wondering how best to hold back the tide.
Someone who knows a lot about this is Martin Markiewicz the CEO and co-founder of Silent Eight, a company that uses AI to combat money laundering and terrorism financing. Here Martin shares his thoughts on how financial institutions can best combat global financial crime.
By any measure, 2020 was a difficult year, with a rising tide of financial crime adding to the disruption and pain caused by the global pandemic. Criminals are capitalizing on the impact of COVID-19, and with many of us forced to abandon our usual routines in favour of working, learning, shopping and socializing online, the attack surface continues to balloon in size.
In response, the Financial Action Task Force (FATF) has called for more resources to be diverted to countering the acceleration of money laundering and terrorist financing activity, highlighting the new threat vectors that have emerged as a direct result of the pandemic. And, unsurprisingly, many financial institutions are reviewing the tools they have at their disposal to fight this growing problem.
Firms traditionally try to manage global risks with regional or data-reliant solutions. In practice, this means dealing with the impact of incomplete data that is often from disparate systems. The situation is further complicated by the fragmented nature of global anti-financial crime regulation, with rules based on FATF standards inconsistently applied between nations. This yields differing approaches to financial crime prevention and sometimes wide variations in the penalties applied for breaking the law.
Amidst this landscape, the challenge for FIs is how to account for local nuance while driving global consistency in a cost-efficient, risk-averse way — all while striving to satisfy different regulatory requirements from the same compliance process. And the criminals we’re up against are savvy. When one firm gets it right, they just move to the next one and so on as they hop from institution to institution looking for vulnerabilities.
How Can We Combat This Scourge?
At Silent Eight we believe it’s through combining leading data science and technology with the knowledge that already exists within institutions. Financial firms already know what they want to do: they have governance procedures in place, and existing policies they create and modify. What can be absent though is an efficient way of immediately executing them to address changes in alerted parties. And to do so efficiently.
In response, firms are increasingly turning to solutions like our own, which actively learns what investigators are doing on the ground, how they do it, and why. This empowers institutions to decide what ideal financial crime compliance looks like for them and drive best practices up the chain. A continuous learning approach also helps firms to replicate winning strategies, while natural language processing (NLP) enables the system to explain its reasoning in plain English, audited for any future review.
This AI-powered “assisted intelligence” approach to fighting financial crime puts the power back in the hands of institutions, providing full auditability, making a virtue of the globalised nature of financial crime compliance by allowing firms to harness the best of their international practices, and delivering better, more efficient tools to help institutions win their battle against the criminals.
Bottom line, we see this as an “AND” rather than an “OR”, freeing firms from the need to choose between AI and human investigators, and between efficiency and de-risking. Only by using the best of technology AND human capabilities, and by de-risking AND driving greater efficiencies, can we take the biggest bite out of financial crime. And that’s precisely what we have the privilege of waking up each day to achieve.