AI a boost to campaign vs dirty money

MANILA, Philippines — Majority of Philippine banks believe artificial intelligence (AI) will stop more money laundering and other types of financial crimes, according to Global analytics software firm FICO.

Based on a survey commissioned by FICO, 73 percent of banks operating in the Philippines are convinced AI will strengthen anti-money laundering efforts.

Conversely, when asked about the efficacy of much older rules-based technology, 95 percent of Philippine banks said they still believe in the ability of the rules-based technology, while 36 percent said they experience significant struggles modifying them.

“Rules-based compliance systems continue to be the workhorse for banks in region when fighting financial crime,’’ said Timothy Choon, FICO’s financial crimes leader in Asia Pacific.

“However, some early adopters are starting to embrace the new world of AI and realize that the decade-old rules-based systems can’t keep up with sophisticated threats on their own.”

“The secret sauce is operationalizing advanced AI technology and making it work side-by-side with the rules-based system.In fact, 20 percent of respondents picked this as their principal obstacle in meeting financial crime risk mitigation targets,’’ Choon said.

According to the survey, 100 percent of the respondent Philippine banks said they would invest in financial crime compliance in the year ahead and 41 percent plan to significantly increase this investment next year.

Key challenges for existing anti-money laundering compliance solutions regionally include 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 anti-money laundering, 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.

Choon said addressing the competing needs of regulatory compliance and customer experience remains a balancing act for most institutions.

“Banks are challenged by the need for more information to deal with high rates of alerts from ineffective systems, while not vexing customers with incessant due diligence questions,” Choon said.

Additional considerations ranked second and third by banks included reputation damage and direct financial losses.

In terms of 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 integrated anti-money laundering compliance survey was conducted in May using an online, quantitative poll of 256 senior executives from banks in Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.