How AI is being applied to AML and compliance

by Feb 10, 2023Insights

Several technologies are changing the fields of anti-money laundering (AML) and compliance to make them more effective and efficient. Artificial intelligence (AI) and machine learning algorithms can analyse large amounts of financial data in real-time, identifying suspicious transactions and flagging them for further investigation. 

Most large enterprises currently generate huge data sets of financial information. AI-powered AML systems can process and analyse large amounts of data from multiple sources to identify potential risks and suspicious activity. As South Africa sits on the cusp of Financial Action Task Force (FATF) greylisting, it’s essential that businesses act now to prevent the negative economic consequences that could follow. 

Threat of greylisting spurs change

It is possible that South Africa may be greylisted in the future if concerns about its compliance with international AML standards are not addressed. Greylisting is done by the United Nations Financial Action Task Force (FATF)  – an intergovernmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering and other international financial threats.

In recent years, South Africa has been identified by the FATF as having significant AML and compliance deficiencies and has been urged to take action to address them. The country has been placed in the “Enhanced Follow-up” process, which means that it is being closely monitored by the FATF to ensure that it is taking sufficient steps to address these deficiencies. 

If South Africa does not take sufficient action, it may be greylisted in the future, which could have serious negative consequences for local businesses and the country’s economy as a whole. In response, South African companies are turning to cutting-edge technologies, such as AI, to improve their financial integrity. But, what exactly can AI do to improve AML and compliance?

Using AI with AML 

AI tools can detect money laundering by using specialised algorithms to analyse vast lakes of data and identify suspicious patterns and transactions. This enables businesses to monitor transactions, customer behaviour and detect fraudulent activities at scale.

The key areas in which AI can be applied to AML include:

  • Transaction monitoring: AI algorithms can automatically monitor transactions and flag unusual or suspicious ones.
  • Customer due diligence: AI can assist in verifying customer information and detecting any fraudulent activities.
  • Risk assessment: AI can help assess the risk level of customers and transactions, allowing financial institutions to prioritise their AML efforts.
  • Sanctions screening: AI can automate the process of checking customers and transactions against sanctions lists.
  • Fraud detection: AI can identify patterns of fraudulent activities in transaction data, helping financial institutions to detect and prevent money laundering.

AI also has predictive capabilities; it can be used to generate future predictions about potential suspicious activity, allowing financial institutions to proactively prevent money laundering and other financial crimes.

How AI is used with compliance

New technologies are increasingly being used to help with compliance in many organisations. By automating and streamlining the compliance processes, AI helps institutions reduce false positives in their processes and the reduce the cost of their AML programs. 

Compliance regulations can be complex, making it difficult for businesses to know what appropriate action to take. Using AI can help reduce this complexity as well as the potential for human error. By monitoring and detecting potential compliance risks, AI enables compliance mapping capabilities. It allows greater accuracy when it comes to compliance processes and can be used to identify areas for improvement. 

AML and telcos in Africa

Telcos are highly vulnerable to money laundering. The large amount of money and consumers they handle mean they need effective AML tools to prevent, detect and report money laundering activities.

African telcos have a legal obligation to meet international AML and compliance standards. The aim is to ensure that telcos are not involved in any criminal activity, such as fraud, bribery or money laundering. These standards are also important for protecting the customers and preventing any financial harm. 

The threat of greylisting can have serious negative consequences for African telcos too. It can make it more difficult for them to operate internationally and could potentially damage their reputation and bottom line. By using AI to boost AML and compliance, African telcos can operate more effectively both locally and in other regions. 

4C Group of Companies works with large telcos and other enterprises in Africa to provide information and business assurance, among other services. These services ensure that your business has the right fraud management and AML procedures in place. Powered by AI, 4C is here to ensure that your company remains compliant with international standards and regulations. For more information, please contact us today.

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At 4C Group of Companies, we strive to effect operational changes and cost savings for customers through our iNSight product and associated services. This product’s main function is to re-purpose and deliver business-critical information to a variety of systems and stakeholders. 

We specialise in information assurance, business assurance, fintech solutions and a variety of business systems. For more insights into our products and services, check out our blog page or follow us on Facebook, LinkedIn and Twitter.

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