Criminals are using advanced strategies and technologies to carry out their illicit intentions like money laundering. The ever-evolved methods here are providing them with techniques that manual verifier is not capable of detecting. Criminals use these to exploit operations of banks, insurance firms, gaming/gambling platforms, the crypto industry, and other such financial institutions.
Regulatory authorities like FinCEN, FATF, and AUSTRAC oblige financial institutions to verify customers, identify UBOs, and track the sources of funds. Institutions require digital AML solutions to ensure compliance with these standards. The AI-driven solutions pace up the verification process by providing accurate and quick identification. They further enhance security through constant monitoring of the customers. This blog covers the technological assistance these solutions offer.
Artificial Intelligence (AI) Technology for Building Efficient AML Verification Program
Regulatory authorities enforce AML laws like BSA on financial institutions to develop effective verification processes. Banks and other financial institutions must comply with these regulations. To do so, incorporating technologies like machine learning, and artificial intelligence guarantee high chances of ensuring compliance.
As per these regulations, financial institutions should collect customers’ information prior to onboarding and later perform continuous monitoring of transactions to detect suspiciousness in time. The following technologies enable financial institutions to go above the old ways of AML monitoring while shielding the legitimate money processes.
Monitor Transactions Without Delays
Regulatory authorities have set certain thresholds for transactions. Any transfer exceeding these is considered to be suspicious. For instance, The Bank Secrecy Act obliges financial institutions operating within the U.S. to instantly report transactions exceeding $10,000. On the contrary, criminals are smart enough and perform multiple transactions of $8,000 which increases complexity and makes it hard for banks to detect suspiciousness.
Therefore, financial institutions need to monitor these customers and perform regular checks. The technologically evolved AML solutions make this task easier while mitigating the chances of money laundering and other fraudulent transactions. These solutions identify high-risk money transfer patterns and help financial institutions detect them prior to failure in compliance. This way, banks and other institutions can report fraudulent activities directly to authorities in time.
Eliminate Inaccurate Entries through Automated Verification
Financial institutions deal with millions of clients and billions of transactions, making it hard to keep close tabs on every customer. However, with an automated AML verification solution in place, they can analyze and verify the huge number of customers in minimal time. These digital solutions automatically cross-verify customers against global sanction records and checklists. For instance, Politically Exposed Persons (PEPs), regional sanctions, and adverse media mentions.
Moving on, the digital AML systems minimize the chances of false positives and discrepancies by asking for pictures of documents. This helps financial institutions to perform due diligence by evaluating customers’ profiles in real-time. Shufti Pro Funding indicates that the automated screening completes risk assessment by incorporating AI “robots” that are not prone to human errors.
Machine Learning (ML) to Reduce Discrepancies
ML is a result-providing tool of AI technology because it uses algorithms to identify patterns in money transactions. It is capable of self-learning which makes it more efficient. ML detects alteration in customers’ behaviour, and transactions, and ultimately identifies suspiciousness. Furthermore, ML can analyze huge datasets making it possible for financial institutions to verify millions of customers in minimal time.
It further performs continuous transaction monitoring and notifies the respective institutions of the suspicious behaviours. For instance, frequent money transfers, unusual deposits, and suspicious blockchain transactions. ML tools mitigate the chances of money laundering and other criminal threats by reducing the chances of false positives. Ultimately, financial institutions can ensure better AML compliance and reduce the chances of hefty fines.
Artificial Intelligence (AI) for Multi-Layer Identification
AI technology is the game-changer in the identity verification world because it is capable of mimicking human intelligence and manual input. As per Shufti Pro News, it automates the customers’ identity verification process and analyzes huge datasets. AI-powered solutions rely on mathematical algorithms that make them less prone to human-based discrepancies.
Furthermore, AI-driven AML screening enables financial institutions to do more than just document verification. It provides multi-layer verification through biometrics. This scan the distinct human traits like face, voice, iris/retina, DNA, signatures, and fingerprints. To make sure the end-user is present in the real world, the systems detect liveness along with these checks.
In a Nutshell
Criminals are no longer using the traditional ways to launder money, rather they use technologically advanced methods to bypass the AML verification checks. For instance, digital identity theft, photoshopped documents, and hidden sources of funds. This is why financial institutions are in dire need of robust AML solutions. These will not only help these institutions to build an effective verification process but also a better screening of customers. Financial institutions can keep track of transactions and other fraudulent activities ultimately safeguarding their legitimate operations.
