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AI-Based Detection

Thanks to advances in technology, both fraud and fraud detection methods are evolving and have taken on a new and sophisticated form. What this means is that organizations, especially when they are considering overhauling their compliance to adhere to more time-relevant detection and investigations support, can't afford to dispense with the most cutting-edge tools available, i.e., AI-based detection and investigations support.

What Is AI-Based Detection And Investigations Support?

AI-based detection or AI-based fraud detection and support tools leverage the power of artificial intelligence and machine learning to watch for, detect, and alert well-established fraud patterns. This is the core strength of these systems. If AI-based detection tools are trained with the right data and are programmed to raise red flags when they detect certain behavior patterns, they can monitor financial activity and transactions much more efficiently than traditional systems. And they can learn to detect anomalies.

AI-based detection and investigations support can also cover more ground and monitor threats that might not be detectable otherwise, simply because they are good at detecting patterns and might spot things that are beyond the norm.

How AI-Based Detection Fits With Compliance

AI is already widely used by compliance teams of financial institutions. It allows them to scale the scope of their compliance monitoring and ensure minimal human errors and oversight inherent to human monitoring. There are various ways in which AI-based detection tools can help improve compliance regulations:

  • Thanks to AI-based detection and investigation support, financial institutions would be able to comply with the most stringent AML requirements, thus avoiding hefty penalties.

  • AI-based detection can improve the cost aspect of compliance. Even if AI-Based detection and investigation support seem expensive at initial deployment, the improved ROI it offers and the scaling potential it has compared to traditional compliance teams and tools make it significantly more cost-effective in the long-run.

  • It saves compliance teams a lot of time. Even if AI-based systems can’t mitigate the fraud on their own or deal with anomalies autonomously, they can filter down the number of detections that require human intervention significantly. This can help save compliance a lot of time and ensure their precious resources are being employed more efficiently.

AI-Based Detection And Investigation Support In 2021

The AI-based detection and investigation tools have been in place (and are continually evolving) since 2010. But 2021 might see more rapid changes in both detection tools as well as their compliance integration for two reasons.

The first reason is that the 2020 pandemic has expedited the pace of online banking, investing, and transactions. Since there were and from now on, there will be more transactions from home than there might be in consolidated points (POS systems in malls, brick-and-mortar banks, etc.), tracking all the money trails might become more challenging, especially from an AML perspective.

The second reason is the legislative power behind FinCEN and other regulatory bodies responsible for tackling money laundering issues.

Both of these reasons might force compliance departments of different financial institutions and businesses that rely heavily on these institutions to adapt or improve their detection and investigation support by leveraging AI Tools.

Why Is It Needed?

If we use a cybersecurity term here, the "attack surface" for fraud detection and compliance is increasing. It means there are now more channels and more angles that malicious entities can leverage to conduct illicit monetary transactions and financial crimes. They have to use the most innovative and cutting-edge tools and methods to achieve their goals. If regulatory bodies and compliance in financial institutions are not willing to do the same, they might get hoodwinked relatively more easily.

Therefore, turning to AI-based detection and investigation support is no longer an option but a necessity.

How ComplyGenics Can Help

Many Fintech companies do not have the resources at hand to properly navigate an environment of increasingly complex regulations and compliance measures. ComplyGenics is here to help. We provide such services as compliance audit and program remediation, AML rule tuning, and model validation, helping you mitigate risks and keep up with the best industry KYC and FCP standards. We also specialize in staffing for the niche, helping you connect the right talent for your firm within the industry. For more information, visit our site or contact us.

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