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The Federal Reserve stated in 2022 that “the benefits of instant payments are increasingly important to consumers and businesses, and the ability to provide this service will be critical for financial institutions to remain competitive.” They were correct and, today, nearly $500 billion in real-time payments occur daily, and much of this activity takes place as cross-border payments. That means a potential huge revenue stream for banks, but also more risk for banks and FinTechs that handle these payments, as nefarious actors stand ready to leverage this new ecosystem to launder money and finance illegal and illicit activities.
Since cross-border payments present higher risk, they generate far more compliance alerts than domestic payments. It’s simple to understand why. According to the Federal Reserve, “Compliance with anti–money laundering and anti-terrorism financing regulation is often cited as one of the most persistent challenges in cross-border payments.” SWIFT noted that poor data quality in cross-border payment messages makes compliance difficult to achieve. “Banks that receive suspicious payments must often follow a trail of breadcrumbs across time zones to find missing data. Simply misspelling a name can quickly result in higher costs, missed shipments, idle factories, and empty shop floors.”
Still, the ability to process payments within seconds instead of days is undeniably transformative, bringing significant advantages to both consumers and businesses. So, as RTP and cross-border payments surge in popularity and become the norm, how can financial institutions manage sanctions risk in real-time without compromising customer experience?
Enter AI-driven automation
One of WorkFusion’s AI Agents – product name Tara – enhances the transaction screening process by automating real-time payment screening, particularly for sanctions compliance and anti-money laundering (AML) tasks, reducing risk while boosting the customer experience. In fact, Tara’s AI capabilities enable ‘her’ to automate up to 70 percent of false-positive alert adjudication. As noted in our recent press release, Crown Agents Bank, a UK-based financial institution specializing in providing FX and cross-border payments, has adopted AI Agent Tara for these very reasons. “Because our business is growing rapidly and our payment alert volumes are increasing, we needed a solution that could help us scale exponentially without added costs,” said Shyam Kakad, SVP and Head of AFC Operations for Crown Agents Bank. “By integrating WorkFusion’s AI Agent, Tara, into our transaction screening processes, we are reducing the false positive burden on our team, streamlining operations, and enhancing the speed and accuracy of payment processing. This is another example of our dedication to leveraging technology and AI to better serve our clients and navigate the complexities of global financial compliance.”
Starting small and growing over time
While Tara’s AI and automation capabilities enable the solution to automate up to 70 percent of false-positive alert adjudication, Crown Agents Bank sees plenty of benefit in leveraging the configurability options in WorkFusion to start small, gain fluency in the Tara AI Agent, then double their auto-adjudication rate in the near future. The flexibility provided by multiple configuration options, which can be easily turned on and off as well as tuned up and down, gives FIs the level of comfort they desire when using a new technology.
WorkFusion recognized early in the market testing of our AI Agents that banks and FinTechs exist on a wide continuum when it comes to risk taking and risk aversion. So, Tara provides configurability options for customers to ease into the software and decide how much AI and intelligent automation to use and in what specific ways. Technology teams, particularly in traditional banking and finance, tend to prefer this method of new technology adoption. Once fully confident in the software or solution, they then optimize for greater efficiency, speed, and other benefits. Crown Agents Bank is a prime example of this strategy in action. At the outset, AI Agent Tara provides the bank with the following:
- A way to minimize work: Tara saves Crown Agent Bank’s analysts an average of 30 percent manual effort, freeing them up to focus on higher value investigations.
- Resolution of false positives around sanctions hits: Tara helps to effectively manage payments requiring manual review by reviewing false positives in sanctions alerts. Tara is currently set to auto-adjudicate up to 30 percent of false positives – with a target of reaching 60% in the near term.
- Real-time reviews: Tara takes immediate action on incoming alerts.
- Risk mitigation: Consistent quality of work and defensible narratives for audit.
This is exactly the type of use case which OFAC envisioned when it established guidance for sanctions compliance in RTP and cross-border payments, stating, “Technology solutions for sanctions compliance, which have advanced significantly in recent years and become more scalable and accessible, can be leveraged to help mitigate a financial institution’s sanctions risk, including with respect to instant payment systems.”
To learn more about improving your compliance operations as your business pursues new high-potential revenue opportunities, read about WorkFusion AI Agents for FinCrime compliance.