ARTIFICIAL INTELLIGENCE PROGRAMS WITH MACHINE LEARNING CAPABILITY ARE NOW AN INTEGRAL PART OF BANKING BEST PRACTICES

All risk-based compliance programs, to be effective, must adopt banking best practices, Banks must benchmark their AML compliance against those of the world's leading financial institutions. They known that older and slower methods and platforms are not only more expensive in the long run, but they are less efficient. Both problems plague the financial system; ever-expanding compliance costs are becoming more expensive, and objectively speaking they often fail to identify and interdict, in real-time, financial crime, especially money laundering. Frankly speaking, they are not working, and they are costly to boot.

Enter AI with machine learning onto the compliance stage; such programs save costs and are far more effective than the legacy AMA systems which financial institutions have been saddled with in the past. Let;'s face it, the old programs simply fail time and again, and they are expensive. Statistically, more than nine out of ten ongoing money laundering operations are not uncovered by today's compliance departments. You only learns about it after the fact, when law enforcement drops that subpoena on you two years later, having made arrests when it has caught laundrymen through investigation.

AI has, like it or not, become an element of banking best practices, meaning that its adoption is not optional with any financial institution seeking to avoid regulatory action, and/or negative publicity when the shortcomings of their program results in media naming the bank as the conduit for money laundering, in a very public criminal case. Therefore, AI is not only mandatory, it can save your bank from being own the regulatory or media hot seat, by preventive action.

Having had the privilege for many years, of lecturing to Federal and state regulators, and interacting with them to learn about their challenges, I know that they often take a close look at precisely what programs the banks they audit are operating, are reassured when they see that advanced systems are in place, and raise the issue when they note such programs are not in use. I specifically observed that in connection with a program that I was involved with; clients were asked by auditors whether they were using it, which is food for thought. 

Therefore, not only is it compliance with financial services industry best practices, it is something that regulators are looking for when they conduct an examination. That, and the fact that AI-power AML platforms are effective, is enough to convince you to abandon your obsolete systems, and upgrade.To do anything less in 2023, when employing a risk-based compliance program that is required to be at the same level of other leading banks, is not an option.