Worldwide, the estimated amount of annual money laundering is over 2% of GDP, or about $800 billion. The surge of Generative Artificial Intelligence (AI), a particular type of simulated intelligence that can deliver content without any preparation, is now being used worldwide to combat financial fraud.
In July, Kroll released a report on financial fraud and crime revealing that 69% of executives and risk professionals around the world predict financial crime risks to rise over the next year with the main drivers being cybersecurity and data breaches. Out of 400 experts asked in the “2023 Fraud and Financial Crime Report,” more than half said AI and machine learning have been implemented into their financial crime compliance programs. A whopping two-thirds said they plan to invest more in AI tech tools to combat financial crime over the next 12 months.
AI innovation was pushed into the spotlight following the introduction of OpenAI’s ChatGPT, which utilizes robust language models to create human-sounding interactions. This has sparked an ongoing dialogue among global organizations over what some see as the most important technological innovation in history. And now, we are starting to see how banks are beginning to use AI to prevent fraud.
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So far this year, banks have spent a staggering $274 billion trying to battle money laundering alone. The need for increased efficiency to crack down on this and other fraud is clear. Fortunately, there are some shining examples of how traditional financial institutions, their newer fin-tech brethren and technologists are leveraging AI to streamline this fight.
“ OpenAI’s ChatGPT has sparked an ongoing dialogue among global organizations over what some see as the most important technological innovation in history. ”
A new AI tool from Iceland’s Lucinity, called Luci, is helping bank compliance professionals find data and determine faster whether reports of suspicious activity are cases of fraud or actual money laundering networks. What used to take days of time and money for employees looking into financial crime now takes minutes.
In London, Ernst & Young Global Limited (EY) just signed a deal with SymphonyAI to help its clients improve their business operations and performance. The initial focus of the partnership will support financial crime prevention and regulatory compliance.
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Computer engineers at Deutsche Bank
DB,
have recently rebuilt their client activity monitoring system, labeled Black Forest, that observes transaction criteria like volume, currency and destination, and then automatically learns which patterns flag financial fraud from reams of data. Both retail and corporate transactions are being examined, and it’s already paying dividends — the tool has already caught several fraud cases, including money laundering and tax evasion, in the short time since its launch.
“ What used to take days of time and money for employees looking into financial crime now takes minutes. ”
Quantexa has revolutionary software that maps companies’financial transactions and other information in clear and easily comprehensible ways, which helps deter the kinds of tricks used by criminals to hide their transactions.
HSBC
HSBC,
and ING
ING,
have already adopted AI tools to improve compliance with anti-money laundering rules after recent issues. Microsoft’s
MSFT,
Azure OpenAI is helping its customers protect against various financial crime, including fraud, electronic crime, money laundering and more.
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The financial costs and scale of these crimes are staggering. AI seems poised to be a valuable tool in the fight against this kind of financial fraud. We must be mindful to carefully embrace AI, while also protecting privacy and human rights.
Barry McCarthy is CEO of Fortune 1000 company Deluxe, which helps financial-services firm with digital payments to data-driven marketing. Deluxe’s founder invented the concept of a personal checkbook some 100 years ago.
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