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AI To Be Used More In 2018 For Financial Crime Detections: FICO Report

AI To Be Used More In 2018 For Financial Crime Detections: FICO Report
The banking industry is being impacted by technology in almost all aspects. The manner in which customers are expected to be engaging with banks, the way banking products are being manages and the process of offering such products to customers is being impacted by digital disruption.
According to a report in the industry by FICO, there is need for the fraud detection and mitigation strategies in the industry needs to become faster and smarter given the more sophisticated nature of money laundering schemes. Experts suggest four ways to enhance the way financial institutions fight money laundering in 2018.
The first is to adopt a more holistic approach to the problem. Even today, many financial institutions treat fraud prevention, cybersecurity and anti-money laundering (AML) in silos. Adopting a holistic approach entails making use of one customer risk classification which would be bale to take into account any available information irrespective of the source – a fraud system, the CISO’s system or a compliance system.
The second guide is to find new trends and patterns for forgery with the use of Artificial Intelligence (AI). According to FICO experts, mostly basic analytics are put to use for fraud detection at the present. There is also an over dependence on rules. There is an expected trend in the industry in 2018 where there would be an addition of artificial intelligence and algorithms that are more powerful to the already existing capacity for fraud detection.
The aim of this trend and suggestions is not to catch up with the hype surrounding AI but to use it to reduce the workload as well as to enhance productivity at compliance departments. There is not likely to be a replacement of the traditional approach with AI in the short term but an increase of AI which can help to upgrade the detection systems to the next level. Using Ai would enable banks and financial institutions to rank up the current alerts and create new forms of alerts when such systems “find the unknown patterns”.
A third trend for 2018 is to automate the process that looks for tax evasion. In many instances, tax evasion is one of the aspects of regulatory compliance. It is expected that there would be more leaks in 2018 in line with the likes of the Panama Papers and the Paradise papers. Agencies and organizations enforcing compliance will be trying out a holistic approach towards detection and considering seriously tools which would consider any of this information in an automated manner.
The last trend is an acceleration of adoption of real time detection of frauds. Frauds and illegal schemes are getting faster in addition to getting more complex and sophisticated.  And hence detection process also needs to become faster. Experts therefore anticipate rise in a real-time detection needs for the AML space in manner that is similar to the credit fraud detection space.

Christopher J. Mitchell

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