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Banks grapple with new technologies in AML fight

Craig McLeod, financial services expert at PA Consulting, is quoted in an article on how banks can address money laundering through AML technologies.

The article discusses whether AI and machine learning are crucial in fighting financial crime and gives an overview of the regulatory framework on the issue.

Craig acknowledges the trend for banks to buy specialised technology from individual providers and stitch the components together themselves, rather than going to a one-stop-shop solutions vendor. He comments: “Young fintech companies have had to scale rapidly which leads to teething problems. It's a challenge for banks to put faith in young fintech firms to ensure they have compliant, robust, AML protection”.

Craig notices that with newer and faster payments “money changes hands more rapidly and it is much harder, because of the complexity, for banks to keep up with that pace of change within their customer base”. Also, the profile predictability of customers has changed. Whereas in the past, customers would have phoned their bank if they went abroad “now people don't do that, the world is a smaller place; people are travelling to more interesting and exotic places”, he adds.

Craig says that it is difficult for businesses to operationalise as regulation has moved away from rules and has become more risk-based. “How to assess financial crime risk indicators – this is a really tricky aspect of regulation”, he explains. “It is extremely difficult in the operational context. Banks need to support their people by empowering them through better processes, and get more effective governance and oversight”, he adds.

Craig concludes that we must look to the future, and having all the latest technology will not alone solve banks' AML problems. He says: “Banks are trying to reduce the costs of compliance; they are looking ahead, but they also need to have an eye on the past. From the regulators' perspective, you can have all the latest technology, such as AI and machine learning, but there is no point pushing forwards if they have ignored their legacy issues and past failures”.

Read the full article in Retail Banker International

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