Uncover the Laundryman's Secrets

Sunday, January 22, 2023

THE USE OF ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING IN PERPETUAL KYC



Career money launderers, and the criminal clients that they advise, as well as experienced PEPs who hide their true status, know that opening new bank accounts that appear to be low risk gets them past the gatekeepers. Their strategy, which is generally, successful, is to wait a short period before moving forward with placing dirty money in those accounts, and this scheme works more often than not.

The only way to foil this technique is what is known as Perpetual KYC, also known as Continuous Due Diligence. This is the ongoing, post-account opening maintenance of not just transaction monitoring, but of running repeated checks on your bank customer, ad infinitum, to insure that you do not miss any of the red flags of money laundering and financial crime.

Unfortunately, to properly execute Perpetual KYC on your bank clients, which is extremely labor-intensive and time-consuming, compliance departments require staffing far beyond which both budgetary constraints, as well as the financial services culture in general, permits. Not only won't your executives be authorized by shareholders to pay for it, such a process demands a near real-time check of a mountain of transactional data that would overwhelm those examining it.

Enter next-generation platforms, using artificial intelligence to scan the data, then exploring and developing the leads found with machine learning, to cut through the data, and extract results that legacy programs, and the human element, could never keep with.

Did your bank customer engage in some opaque activity in a geographically remote part of the financial world? Did he or she indulge in an obscure and esoteric strain of money laundering technique in a single transaction? Your people will miss it, but AI will not only catch it, it will take an inquiry further, and show you an aspect of your client's activity that neither you, nor your legacy programs, would ever catch otherwise.

If there is an industry that will most benefit from the application of the advantages of artificial intelligence, it is anti-money laundering compliance, which will finally start to level the playing field; start using it. 

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