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73% of PH Banks Hopes AI Will Halt Money Laundering: A Survey

“The secret sauce is operationalizing advanced AI technology and making it work side-by-side with the rules-based systems.”

This could be the end solution banks nowadays are hoping, and this was what revealed by FICO, an analytics company, in its recent survey. The results disclosed that 73 percent of Philippine banks believe AI (artificial intelligence) will strengthen anti-money laundering efforts. At the same time, many are doubtful to integrate and convert advanced technology operations to success.

When also asked about the perception of how effective the much older ruled-based system is for Anti Money Laundering, 95% of the surveyed banks said they still have faith and trust in the current AML systems, while, right to note that 36% means the experience for these are already a struggle. Twenty percent of respondents picked this as their principal obstacle in meeting financial crime risk mitigation targets.”

According to FIC’s Asia Pacific lead Timothy Choon, “Rules-based compliance systems continue to be the workhorse for banks in the Asia Pacific when fighting financial crime,” “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.

Furthermore, the survey also revealed the critical challenge of already existing AML compliance solutions in the region. These 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.

In other news, one of the critical aspects needed to focus on is customer experience. In this note, two-in-five respondents classified 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 acknowledges this concern, together with the competing needs of regulatory compliance.

He further added that “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.”

Other considerations mentioned respectively, were: reputation damage and direct financial losses.

Meanwhile, almost half of the respondents named the speed of responding to new threats. At the same time, a third believe achieving accurate detection remains a significant test as factors in dealing with financial crime responses.

Across the Asia Pacific, most banks (93%) prefer to have still their technology spend on either advancing or enhancing their compliance systems.

Of these, two countries – Singapore and Hong Kong gathered two-thirds of respondents favoring to start new investments to comply with technological standards.

In the Philippines, 100 percent of banks said they are unfazed and will remain to invest compliance next year, whereas 41 percent plan to augment this venture in 2021 suggestively.

With the bullish forecast in terms of compliance technology by banks across APAC, 49 percent of respondents said budgets would accompany the increase.

Among these countries who would do this are: Indonesia, Australia, Thailand, and the Philippines were the markets that said they would invest the most in 2021.

Expounding more of the reason for a survey, Choon said that “this survey, conducted in May, shows that even in the recent economic downturn triggered by the pandemic, banks remain committed to targeted spending that boosts their AML compliance defenses,”

He also added, “there is an increased willingness to perceive compliance and fraud as a common financial crime risk – a fraudster is more likely to launder money, and vice versa.”

In conclusion, he parted the interview detailing the overview in terms of financial technology compliance. “This convergence is a global trend. Banks in the US and UK are well on their way to fully integrating their compliance and fraud functions, bringing together teams, leaders, and technologies. We believe banks in th Asia Pacific are looking to these markets to see what will work, with plans to follow quickly in the next 24-36 months,” encouraged Choon.

Across the Asia Pacific, larger multinational banks were more likely to use a vendor solution for AML, while using an in-house system was more familiar with domestic banks.

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