By PAUL O’DONOGHUE, Senior Correspondent
AI models have the potential to significantly increase the effectiveness of AML systems, according to senior bank executives.
Robert Edwards, former Global Head of Transaction Monitoring at Credit Suisse, said that the new technology can replace rules-based systems currently used by most financial institutions.
“ I was brought into Credit Suisse to implement a rules based transaction monitoring system. [But] it hasn’t really evolved over the past 20 years. That is not the case with AI,” he said.
“AI is changing month to month, the speed with which it’s changing it’s really quite impressive.
“I think what we’ve done with rules-based engines and 99% false positives has really not been that effective. And AI gives us an opportunity to become much more effective in our transaction monitoring and alert resolutions.”
Mr Edwards was speaking at a webinar on AI model governance organised by Hawk and AML Intelligence.
The event came ahead in advance of an in-depth report interviewing senior banking leaders on this topic. The report will explore how they create, maintain and govern their AI models. The webinar explored key insights from the report.
Those interested can receive more details by signing up to the AML Intelligence newsletter [HERE], where we will share the publication of the e-book.
AI models and ‘clarity of purpose’
Adrianna Fabijanska, Global Head Financial Crime Compliance Investment Banking at ING, said that a key consideration for banks is to ensure “clarity of purpose” when implementing AI models.
“Our biggest learning curve throughout the years that we’ve been experimenting with various models, including the most recent AI models, is actually understanding that AI is just another tool,” she said.
“Basically, it can help amplify strategy. But it can also make it much worse if the strategy is not clear.”
She said that financial institutions must start with identifying a use case for an AI model before implementation.
“We start with defining, okay, what is exactly the problem we’re trying to solve? And therefore, what is the risk that we’re trying to mitigate through implementation of the solution?
“We try to look into [what] we want to improve, whether it’s reducing false positives, identifying hidden patterns, or improving consistency of outcomes. Everything else flows from that clarity. If that clarity is not there, we’re going to have a [negative] ripple effect.”
The full e-book, featuring insights from Mr Edwards, Ms Fabijanska, and other banking leaders, will be published next week. Both AML Intelligence and Hawk will share further details.
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