According to a recent Thomson Reuters report, nearly half of all companies have been victims of financial crime with aggregate reported losses of $1.45 trillion across the roughly 2,300 surveyed businesses.
The report also shows that money laundering made up 14% of financial crime activities. And over 90% of surveyed respondents said they believed collaboration and public-private partnerships were key factors for combating financial crime. Many fintech organizations are eager to develop new technologies to help in the fight against money laundering and other financial crimes, but government support has been slow to start.
Cutting-Edge Innovations Powering AML Technologies
Thanks to advancements in modern technology, the success of AML campaigns can be vastly improved. Some of the core technologies empowering advanced AML programs are machine learning, advanced data analytics, and robotic process automation (RPA).
Machine Learning for AML
Machine learning, also called artificial intelligence (AI), involves the creation of computer programs that learn to identify patterns with greater success over time by taking raw data and creating associations from it. Machine learning can be applied to AML pursuits by combing organizational data for the previously mentioned red flags of money laundering activities.
Advanced Data Analytics for AML
While machine learning can develop a process for scrubbing raw data to identify patterns, advanced data analytics can help create reports from that data that humans can easily digest and reference. Advanced data analytics can improve the quality of the data while empowering insightful metrics and reporting tools.
Robotic Process Automation (RPA) for AML
RPA employs software automation to perform repetitive tasks without the need for constant human involvement. This allows organizations to make better use of their human resources.
AML compliance can be a complex and resource-intensive endeavor—especially for smaller organizations. Using RPA can help AML Compliance Officers increase their effectiveness while freeing them up from rote tasks that can be achieved faster and more accurately through automation.
Nascent Government Support for Crime Fighting Technology
Arizona is the first state to enact a regulatory fintech sandbox, giving private companies the ability to launch new fintech innovations to consumers on a limited basis without being hampered by numerous licensing requirements and fees typically levied against such enterprises. Already, more than a dozen organizations have begun work creating products and taking advantage of this program. This is a fantastic step in the right direction towards empowering fintech companies to stay ahead of modern financial crime.
At the federal level, some support for financial crime-fighting technology comes from agencies like the United States Department of the Treasury Financial Crimes Enforcement Network (FinCEN), but other federal efforts remain nascent.
FinCEN’s Innovation Hours Program supports private sector fintech innovation by empowering discussion of new technologies and methodologies for enhancing anti-money laundering (AML) compliance programs. The goal of the Innovation Hours Program is to foster private-public relationships so they can work together to tackle the challenges presented by innovating within the AML and counter financing of terrorism (CFT) sectors.
Cutting-edge technologies are being leveraged towards creating innovative solutions for fighting financial crime.
Compliance frameworks like the Bank Secrecy Act (BSA) and AML programs combined with FinCEN’s Innovation Hours Programs are only the first steps in the war against modern financial crime. With virtually every business operating online in the modern world, cybercrime is an ever-increasing threat, and innovation is necessary to ensure organizations can get ahead of the criminals looking for ways to abuse contemporary systems.
Modern approaches to AML are promising but they still lack guidance and comprehensive backing from the government regarding testing and approval processes. While government backing has been slow to start, financial service organizations can’t afford to wait until rules and regulations are nailed down before starting work on applying new technology to support their regulatory compliance programs. Financial organizations will find themselves behind the curve once legislation is passed, with these regulations becoming mandatory if they don’t get started on their AML efforts now.
Allata offers a suite of services that aid financial crime departments in choosing AML software fitting their needs, implementing those solutions, ensuring data accuracy throughout the system, and leveraging technology for the betterment of the organization. Allata provides financial institutions with a path towards better business through better technology. Contact Us.