At the Financial & International Business Association (FIBA) AML Compliance Conference, David McLaughlin, SVP, Head of Technology Integration at AML RightSource, was joined by a knowledgeable panel of experts including the head of AML modeling and analytics at PNC. The panel discussed technology trends and how they are impacting processes for the teams who have adopted them.

Understanding AML Tech Trends

AI and Machine Learning: These technologies automate data gathering, entity resolution, network analysis, etc., and then apply algorithms to score risk. Even case narratives can be composed by a machine to explain what was discovered to be suspicious or why something was cleared. Advanced technology should not be seen as a replacement for investigators but rather as a tool that helps investigators work more efficaciously. AI-enabled AML solutions allow AML teams to examine research findings instead of doing the digging themselves thus allowing investigators to focus their time and experience on analysis and case adjudication.

Data Clustering: Intelligent technology enables data to be automatically divided into discrete clusters. Cluster definitions can be pre-determined by the user, or solutions can form clusters based on what the data has to say. For AML teams, these types of solutions are decision engines that can, for example, identify when data indicates that a customer should shift from a low-risk cluster to a high-risk cluster. Intelligent solutions that use data clustering can also call out a shift in risk segmentation and automatically trigger high-risk customer reviews as part of perpetual KYC efforts.

Following Rules: The last trend touched upon during the panel was whether rules-based systems and rule setting would be going away. The panelists believe that sometimes a rule created by AML staff is the right tool for the job. However, having someone familiar with the industry and problem, working together with people who are knowledgeable about technology, will best determine when a rule is effective and where a neural network or an algorithmic tool is the better answer. Rules-based detection engines are not expected go away, but they certainly will not stand alone in the future. 

Process Improvements

The panel dug deeper into how process is impacted when intelligent technology is applied to AML efforts.

Technology has been shown to be very adept at taking on manual activities that investigators have traditionally had to handle. In a manual world, investigators essentially do what in computing is called “ETL” or “extract, transform, load.” In this three-phase process, data is first extracted then transformed and finally loaded into an output data container. When an investigator is being asked to gather the data, organize it, and determine its relevance to the case, they are doing something that a machine can do for them, therefore intelligent technology speeds up the process and makes it more efficient for compliance investigators.

Another skillset involves documenting things in a way that someone will understand three years from now. AI and machine learning technologies are being used to accomplish this, too. In the time available to them, it is impossible for investigators to collect, organize, and determine what information is relevant to a customer and all its counterparties. That heightens the need for technology in the AML industry.

The discussion shifted to the model building process. McLaughlin discussed model ‘explainability’ and validation, describing how AML RightSource’s Financial Crime Investigation Reports meet the requirements for properly documenting, explaining, and detailing various types of AML investigations.

The final piece of the conversation covered how organizations can adopt new technologies into their AML operations. When building this AI-powered technology, it wasn’t viable or desirable for organizations to build and maintain their own AI-enabled AML system. They instead wanted a packaged software solution with enough flexibility to enable them to accommodate the uniqueness inside their organization’s requirements.  Having an intelligent platform which adapts to each compliance teams’ needs can help them make robust business decisions.

To learn more about AML RightSource’s intelligent technology solutions and how they could help your compliance team, visit https://www.amlrightsource.com/solutions.