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FICO: Banks Believe AI Will Stop More Money Laundering

A recent survey by global analytics software firm FICO has revealed that while 73 percent of Singaporean banks believe AI will strengthen anti-money laundering efforts, many remain unsure how to operationalise the advanced technology. Conversely, when asked about the efficacy of much older rules-based technology, 86 percent of Singaporean banks say they still believe in the ability of these AML systems, despite 36 percent saying they experience significant struggles modifying them.

The survey showed that the key challenges for existing AML compliance solutions regionally were: the ability to meet new types of compliance risks in channels and products; the capacity to provide an end-to-end integrated compliance solution; and the facility to update quickly to changes in regulation. Across Asia Pacific, larger multinational banks were more likely to use a vendor solution for AML, while the use of an in-house system was more common with domestic banks.

One of the leading indicators driving change in financial crime strategy is customer experience. Over two-in-five respondents ranked this in their top considerations with 17 percent of Asia Pacific banks citing it as the primary factor behind their current and future approach. Additional considerations ranked second and third by banks included, reputation damage and direct financial losses. When it came to financial crime challenges almost half of respondents cited the speed of responding to new threats, while a third believe achieving accurate detection remains a significant test.

FICO’s comprehensive compliance solution incorporates advanced machine learning techniques designed to address these challenges by significantly improving detection accuracy through patented advanced analytics models such as Soft Clustering Misalignment and Threat Score which can help financial institutions operationalise AI within their existing compliance strategies.

A significant majority of banks (93%) across Asia Pacific are likely to continue their technology spend on either upgrading or enhancing their compliance systems. In Singapore, 95 percent of banks said they will continue to invest in compliance in the year ahead and 23 percent plan to significantly increase this investment in 2021. Overall levels of investment in compliance technology by banks in Asia Pacific are expected to rise in 2021.

“This survey, conducted in May, shows that even in the recent economic downturn triggered by the pandemic, banks remain committed to targeted spending that boosts their AML compliance defenses,” said Choon. “There is an increased willingness to perceive compliance and fraud as a common financial crime risk – a fraudster is more likely to launder money, and vice versa.

FICO’s Integrated AML Compliance Survey was produced in May 2020 using an online, quantitative poll of 256 senior executives from banks across eleven countries carried out on behalf of FICO by an independent research company. The countries surveyed were Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

(This content is surmised from a press release)