Banks speed up their AI adoption to combat money laundering

A third of financial institutions are accelerating their AI and machine learning adoption for anti-money laundering (AML) technology in response to COVID-19.

Meanwhile, another 39 percent of compliance professionals say their AI/ML adoption plans will continue, despite the pandemic's disruption, this is according to a new study by analytics company SAS, consultancy KPMG and the Association of Certified Anti-Money Laundering Specialists (ACAMS).

AI and ML have emerged as key technologies for compliance professionals as they look to streamline their AML processes to fight financial crime and money laundering. More than half (57 percent) of respondents to the study have either deployed AI/ML into their AML compliance processes, are piloting AI solutions or plan to implement them in the next 12-18 months.

"As regulators across the world increasingly judge financial institutions’ compliance efforts based on the effectiveness of the intelligence they provide to law enforcement, it's no surprise 66 percent of respondents believe regulators want their institutions to leverage AI and machine learning," says Kieran Beer, chief analyst and director of editorial content at ACAMS. "While many in the anti-financial crime world -- the regulators and financial institutions alike -- are just coming up to speed on these advanced analytic technologies, there’s clearly shared hope that these tools will produce truly effective financial intelligence that catches the bad guys."

The two primary drivers of AI and ML adoption, according to respondents, are to improve the quality of investigations and regulatory filings (40 percent), and to reduce false positives and the resulting operational costs (38 percent).

"The radical shift in consumer behavior sparked by the pandemic has forced many financial institutions to see that static, rules-based monitoring strategies simply aren't as accurate or adaptive as behavioral decisioning systems," says David Stewart, director of financial crimes and compliance at SAS. "AI and ML technologies are dynamic by nature, able to intelligently adapt to market changes and emerging risks -- and they can be integrated into existing compliance programs quickly, with minimal disruption. Early adopters are gaining significant efficiencies while helping their institutions comply with rising regulatory expectations."

The full report is available from the SAS site.

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