The rapid adoption of artificial intelligence and machine learning in all corners of the financial sector, particularly in anti-money-laundering (AML) efforts, has excited and inspired onlookers and participants alike. But as with all innovations, there are pitfalls to unquestioning acceptance that can actually worsen the situations these technologies are meant to address. Human intelligence must work cooperatively and in the lead role alongside AI and ML to guarantee the best results.
Money laundering and terrorism financing are serious issues that banks must address, especially as too many financial institutions are complicit in enabling the flow of unlawful funds. Unfortunately, the need to act decisively has also resulted in a disabling tightening of trade finance, sorely needed for economic growth. The new Asian Development Bank Scorecard seeks to ameliorate the inadvertent consequences of AML and CFT compliance.
Combating money laundering is no longer a choice but a must for banks. But the effort that must go into fighting it is daunting. How can technology, especially artificial intelligence and machine learning, battle the costs and drains on monetary and human resources required for AML compliance, making the whole process a lot easier and more effective? Can AI be trusted to do the job right?
Banks are spending $20 billion on compliance in an effort to combat money laundering, yet only one per cent of illicit financial flows are seized by authorities every year. While regulations have been introduced to crack-down on money laundering, so far they have had a limited effect.
As customers age, their vulnerability to abuse, especially financial, increases concurrently. Elder financial abuse is not a new crime but is becoming more prevalent with the current senior boom. Where does the bank’s responsibility to ensure safe banking for elderly customers begin and end, and what steps can it take to ensure the financial well-being of all clients, especially its most vulnerable?
It’s not news that many economies of the developing world face barriers to financial inclusion, making it difficult for citizens to both borrow and save; but the good news is that help has arrived in the linking of mobile payments with remittances. From sub-Saharan Africa to Latin America and the Caribbean, mobile money is bringing the previously underbanked into the fold.
The penalties for not complying with ever-evolving anti-money laundering and sanctions regulations are steep and have caught the attention of bank boards and senior management, already besieged by an assortment of other competing challenges. AlixPartners surveyed a variety of institutions to uncover the top AML and sanctions-compliance concerns that financial firms must address, and to discover some of the solutions they are implementing.
On November 15, the Commonwealth Bank of Australia (CBA) held its annual general meeting (AGM), during which a small but notable protest vote emerged against the bank’s board appointments and executive remunerations.
The details matter when it comes to sensitive banking data, especially relating to payments. Regulators are clamping down on banks in response to the threats posed by ever-increasing criminal and terrorist activities and are requiring specific information about not only the sender but also the recipient of a payment; fortunately solutions exist in the form of MT structured message formats.
Many bank managers are grateful that they do not live and work in war-torn countries; but guess what, hardline terrorists are bringing the battle close to home. Within the current world climate, banks, small and large, have a responsibility to participate in the war against domestic terrorism by implementing vigorous anti-money-laundering/counter-terrorist-financing programs.