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If you are a frequent reader of the WorkFusion blog, you are well aware of how common it is for financial institutions (FIs) to struggle to keep pace with nefarious and sanctioned actors or the array of AML and sanctions regulations put forth to stop them. You can read many recent examples in our monthly news roundups of AML-related financial crimes and compliance shortfalls. Here is a sampling:
Financial Crime Developments, Resources and Stories: June 2024 Edition | WorkFusion
Financial Crime Developments, Resources and Stories: August 2024 Edition | WorkFusion
Financial Crime Developments, Resources and Stories: October 2024 Edition | WorkFusion
When FIs lag in their AML and sanctions compliance, criminals are emboldened to take advantage of our financial system and weaken it. FIs also pay a direct price by incurring consent orders from regulators, or worse, get hit with heavy fines for ongoing non-compliance (as the above news roundups illustrate).
In our newly released white paper, How AI Agents Reduce Risk in AML and Sanctions Compliance Operations, WorkFusion addresses the three major operational risks facing AML and sanctions compliance leaders and how they can leverage AI to mitigate those risks. The three risks discussed in the paper include:
- Material and immaterial errors risk
- Analyst alert disposition quality risk
- Poor analyst performance risk
Many FIs, particularly small and midsized FIs, can attest to the fact that L1 analysts turn over in their jobs quite frequently. For this reason, an analyst working at one firm today will likely be working on the compliance team at a new firm within a year or two. Unfortunately, different firms have different compliance policies and ways of measuring risk, and it takes some time for newly hired analysts to get the hang of it. This issue is most often reflected by the first two risk areas highlighted above – ‘material/immaterial errors risk’ and ‘analyst alert disposition risk.’
Analysts also make frequent mistakes when pressure is applied to them to do more with insufficient resources, and this type of pressure is a common occurrence among AML and sanctions compliance teams, for several reasons:
- Alert surges
- Staff turnover
- Government enforcement actions against the firm
Why AI is the right answer now for de-risking compliance ops
In recent years, the Office of Foreign Assets Control (OFAC) has increasingly advocated for innovative approaches to de-risk compliance operations. In doing so, they have emphasized the need for FIs to apply advanced technologies. According to OFAC, “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.”
To help clarify how AI Agents operate, it is important to note that their designs are based on a decade of applying no fewer than 10 subsets of AI to specific compliance operations use cases. These AI subsets include:
- Machine learning (ML)
- Generative AI (GenAI), including large language models (LLMs)
- Natural language understanding
- Natural language processing (NLP)
- Natural language generation
- Classification
- Information extraction
- Named entity recognition (NER)
- Question answering
- Summarization
Today, FIs can acquire AI Agents that have been pre-built and pre-trained for specific AML/ sanctions compliance applications (e.g., adverse media monitoring, customer due diligence, payment sanctions screening alert review, and more).
The paper provides three examples of AI Agents that highly automate specific AML and sanctions processes: Adverse Media Alert Review, Names Sanctions Screening Alert Review, and Transaction Screening Alert Review.
Note that each AI Agent brings humans in the loop as needed. That is a critical requirement at nearly every FI that uses AI Agents. According to Matt Mullen of the technology research firm Deep Analysis in the October 2024 article Forever Friends – AI Agents and Automation, “What’s interesting here is that in the real world of AI and automation projects, the use cases that organizations tend toward actually delivering are nowhere near as skewed towards the replacement of workers as you might have thought.” In fact, while the AI Agents delivered by WorkFusion streamline operations, FIs ‘hire’ our AI Agents to free up analysts to do more meaningful work, not replace them.
To learn how easily AI Agents can transform and de-risk your AML and sanctions compliance program, download the white paper today.
To learn more about our AI Agents, visit workfusion.com.