By Vish Gain for AMLi
FROM BOOMERS TO ZOOMERS, and every generation in between, technology continues to disrupt a cross-section of sectors — and FinCrime has been no exception in this techno vortex of our times. At the #WomenInFinCrime congress hosted by AML Intelligence on Thursday, the role of women and diversity in the workplace was the focal point of discourse. But running parallel to this conversation was the role of technology in financial services — discussed by leading experts in the field. In short, more women and more tech in FinCrime is what we need.
“I’ve had the privilege of working with a lot of financial institutions, many of which operate across geographies and languages,” Rachel Pollock, VP of Professional Services at London-based NICE Actimize. “This experience has given me insight into how we can ensure successful delivery and adoption of advanced technologies.”
“We can’t fight financial crime with manual approaches — it has to be through innovation.”
Burgeoning regulations are causing more AML breaches, and ultimately, more fines. As the rate of online transactions continues to soar and we evolve into an increasingly cashless society, Pollock argues, so is the exploitation of this space by criminals. They are using the same systems we use to protect ourselves to commit their crimes.
Echoing some of these sentiments, Sujata Dasgupta, Global Head of FinCrime Advisory at Tata Consultancy Services, says: We are witnessing a lot of effort and harmonisation of regulations across jurisdictions.”
While regulators are bound by their own jurisdictions, they are more or less the same, she argues. “But there are subtle differences and criminals exploit these small gaps — slight variations slip in through those cracks to push their illegal money around.”
Cost, the very pulse of business, is another victim. Pollock argues that as financial crimes and regulations continue to increase, so is the cost of compliance. “While institutions have some levels of systems in place to stop crime, the changing pace means the system and controls don’t change as much as the threats do,” she said.
“We need to adopt more innovative approaches than they do.”
AI and machine learning the way forward
So, what are these innovative approaches to better fight tech-savvy criminals? Pollock argues the answer lies in Artificial Intelligence (AI) and machine learning: software algorithms that can detect hidden patterns of criminal activity, predict outcomes, and make inferences based on what they learn from experience.
Robotics process automation to take care of highly repetitive tasks and biometrics to identify individuals through facial recognition allows firms to reduce fraud and risk, she says.
“There is encouragement from the regulators in using advanced tech, data and collaboration amongst institutions,” said Dasgupta. “There is this emphasis on collaboration — criminals do not know borders, they don’t care about jurisdictions, channels, payment methods.” “If criminals are organised in networks across countries, then regulators should do the same.”
Citing Australian watchdog AUSTRAC’s Fintel Alliance, Dasgupta said we need to focus more on AI and the use of data to organise and streamline our fight against offenders. “When you’re embarking on a programme that uses tech, it depends on many different parts of your organisation: data, IT, end-users, executive sponsors, and compliance,” said Pollock.
“It’s important that when you embark on this programme, it is done with collaboration. You should recognise the project as a business change programme,” she said. “By doing that, you are standing a far better chance of ensuring the technology is adopted.”
While regulatory guidance on balancing information-sharing with GDPR is still in the pipeline, Dasgupta believes that technology, yet again, provides a solution. “Privacy Enhancing Technologies (PETs) are now being leveraged for sharing data across institutions. This is sharing intelligence without sharing the underlying personal information,” she said.
“When PETs use these technologies, the query is sent from one bank to another in an encrypted format. The other bank does not get to know what the query was about,” she added.
Ultimately, continuous innovation and self-sufficiency are what firms need moving forward, according to Pollock. “Once you’ve delivered your financial crime management solution, you mustn’t stand still. You must continuously look at financial crime patterns, and as that changes, you need to enhance the solution that you’ve implemented,” she argued.
“It really is essential that you understand the solution that you’re adopting. Regulators will be asking you to justify the rationale behind the systems you have,” she added.
“AI is not going to do the job for you entirely, it is an enabler. It’s not supposed to be used instead of humans — but in collaboration with humans.”