Top 3 Breakthroughs in Combating Financial Crime

AI and Analytics driven solutions have been widely adopted across different industries for various purposes. However, only a handful of banks around the world are working with advanced analytics and artificial intelligence technologies to improve their risk and compliance activities.

By Deepak Amirtha Raj, Researcher, Strategist, and Writer.

Combating financial crime

In times of political and economic change, financial crime and corruption tend to grow fast. The shock of Brexit, terrorist attacks, the revolution in the Islamic world and other factors create an environment that is demanding for change.

AI and Analytics driven solutions have been widely adopted across different industries for various purposes. However, only a handful of banks around the world are working with advanced analytics and artificial intelligence technologies to improve their risk and compliance activities.

As the world enters into an era of high uncertainty, the upcoming years will see financial institutions adopt and deploy best-in-class analytics powered tools as part of their efforts to remain fully compliant and to combat financial crime.

With that in mind, here are the top three trends that will power the compliance revolution:


Isolating Terrorism Financing

We saw the number of terrorist assaults across the globe after the events in Belgium, France and Turkey - to name a few - there has been increased focus on the pressing need to impede all flows of funds to terrorist organisations.

However, hiding and laundering money without being detected will be a mission-critical element for terrorists but financial institutions will have to ensure that they are doing everything in their power to stop them.

November 2015, One European branch of a North African bank group encountered this first hand just before the atrocious Paris attack. One of the terrorists involved attempted to transfer money to another well-known terrorist. The Paris branch of this bank used updated analytics-powered technology and was able to block this SWIFT transaction. Unfortunately, the customer in Paris - the terrorist - complained to the North African head-office about the cancelled fund transfer. Since the head-office did not use advanced analytics for their KYC/AML activities and therefore the screening process failed to detect that the customer was a match with the black lists. The transaction was approved and the terrorist was able to get the money.

Following this incident, the bank's reputation has been severely damaged. But as part of the effort to prevent this kind of error from happening again, the bank has now implemented powerful analytics driven AML technology across all branches, including the North African head-office.


Unauthorized Migration

One of the challenges investigators face is the migration of people from one place to another which adds a layer of uncertainty. Just like terrorism, illicit migration and human trafficking activities require funding. For these operations, large networks are put in place and developed across several countries. These networks need to be maintained, which is not cheap.

The only way to truly stop these activities is to cut off their funds which mean the financial crime investigators need to monitor money flowing in and out of countries in addition to all their movements and behaviours. Only the right tools and technologies can be used to monitor all transactions around the globe and detect those who are funding illegal activities.

Generally, KYC will screen sanctions lists to ensure that no banks onboard a customer who is on a sanction lists. At the same time, AML solutions scan all customer behaviours for anomalies. Each customer is allocated a risk profile based on a series of parameters and their behaviour is continuously monitored against the normal behaviour, which is based on historical information.

When a person travels or migrates without alerting their bank and makes a transfer to and from a new country that is a new behaviour that the KYC and AML models could not recognise. This change will be picked up by investigators and flagged to the risk teams as suspicious activity.


Offshore Fund Movement

Data leaks are commanded international headlines throughout the last few years. The Panama Papers leak was unprecedented and it put tax avoidance in the spotlight. It raised global concerns about money laundering and financial crime because many take advantage of complex company structures to finance illicit activities.

As much as $2 trillion is laundered each year, much of it by hiding company ownership. In order to successfully keep track of all transactions and ownership details both KYC and AML need to work in harmony. The latest development in technologies like Blockchain, Advanced Analytics helps to break the complex structure and drills down to the ultimate beneficiary owners of a company.

It is not enough to check customer only during the application stage, even if the checks are okay to onboard. Using analytics based AML tools to keep constant monitoring ensures that if someone who used to be a low-risk customer has started to engage in illegal activities, it will be flagged at real time to stop the transaction.



Terrorist organisation and criminals have always shown an ability to adapt rapidly to any developments by the security forces. It is precisely this swift and dynamic flexibility that makes it necessary for financial institutions to adopt better technologies to help compliance and risk teams. In order to remain compliant banks and other financial services providers across the world should seek the help of AI and Advanced Analytics technology that can offer them the capabilities to combat financial crime.

Bio: Deepak Amirtha Raj is a researcher, strategist, and writer. He studied engineering and business at Saint Joseph's College and proceeded to work in a fast upscale environment, assuring client delight on luxury super yachts. He helps firms by teaching them about Artificial Intelligence, Augmented & Virtual reality, Machine learning and Big Data. He is optimistic about the potential it can bring into the world. He runs a local musicians studio with his brother and loves promoting live music events. You can find him on LinkedIn and Twitter.

Original. Reposted with permission.