Last month, David Lewis, the executive secretary of the Financial Action Task Force (FATF), called for a change in compliance culture by stating that there is an urgent need for financial crime professionals to “stop just ticking boxes.” Speaking at the Chatham House Illicit Financial Flows Conference, Lewis suggested that “an intelligence-led approach is now needed,” and that “there is now a strong appetite and consensus to achieve this, along with tools and technology.”
And the industry certainly seems to agree.
In fact, Sigma previously highlighted a survey published by the Association of Certified Financial Crime Specialists (ACFCS) that suggested that while financial crime caseload productivity stagnated or worsened [last] year, investigators warned that they desperately need more adequate technology to keep up with the increasingly sophisticated methods employed by criminals in the midst of a global pandemic. Notably, the survey discovered that 9 in 10 investigators “feel more investment is needed in open-source intelligence gathering capabilities to accelerate time to insight for investigations.” Furthermore, 88% of the respondents in February’s ACAMS survey, cited the adoption of new technological tools as a top priority for meeting regulatory expectations going forward. And it appears that regulators as well are taking notice. Last month, five federal banking regulators - the Federal Reserve, Bureau of Consumer Financial Protection, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency – issued a Request for Information (RFI) on the use of artificial intelligence (AI) and machine learning (ML) tools in order to understand how these technologies are being utilized.
For those utilizing advanced regulatory technologies, studies have indicated that “end-to-end RegTech implementation promises 634% increase in ROI realizable over a three-year period.” Notably, according to PYMNTS, the FinCEN Files disclosures demonstrate that the financial industry’s use of AI and machine learning is in fact effective, thereby dispelling a common misconception around the advances made in technology in recent years. Yet, according to a survey by Sigma Ratings in partnership with the ACFCS, outdated systems and tools were overwhelmingly cited (53%) as the biggest pain point by respondents. The survey, held during an ACFCS sponsored live Q&A titled ‘Using Smart Data for Greater Effectiveness in Non-Customer Diligence,’ formed the basis of Sigma’s latest white paper that explores the challenges faced by investigators and the opportunities for financial institutions to establish more effective and efficient AML investigations programs by employing “an intelligence-led approach.”
To read Sigma’s latest white paper titled ‘AML Investigations - How The Game Is Changing In 2021,’ click here.