The global banking industry faces heightened risks due to the evolving financial crime compliance mandates to clamp down on money laundering and sanctioned entities and maintain CDD/EDD. Among all, money laundering appears the most pernicious, with more illicit transactions evading anti-money laundering (AML) systems yearly. In tandem, screening sanctioned entities, SDNs, blocked persons, etc., is now a perennial need of financial institutions. Industry estimates place the laundered money to the tune of 2.7% of the annual global GDP, a whopping US$ 1.6 trillion loss. With an estimated 24,000 sanctions worldwide in 2022, inadequate watchlist screening and KYC (EDD/CDD) pose prodigious risks.

With the constant rise and use of technology, Artificial Intelligence (AI) has become a great companion to compliance. Compliance is one of the biggest playing fields and plays a pivotal role in banking institutions. It aims to identify, diminish, and manage risks such as insider trading, spoofing attacks, exploitation of the market, front-running, and more by ensuring that banks operate with integrity and adhere to policies, laws, and regulations during the decision making process. In this post, I will dive into the concept of Artificial Intelligence and compliance, and share some thoughts about why it matters and how to achieve better compliance with AI. In relation to financial services such as Banks, the compliance department is the body responsible for ensuring that the institution as a whole remains in accordance with set rules or standards.

"Traditional rule-based KYC-AML technology necessitates significant dependence on manual efforts particularly in alert investigation stage, which is costly, error-prone, and inefficient" Multinational banks need to ensure compliance not only in their home country but also in environments that are more complex and have fewer infrastructures. For Example, Deloitte has highlighted in its "Meeting new expectation" report that AML sanctions-related fines and penalties imposed in 2013 and 2014 quadrupled the total for the previous nine years. Artificial Intelligence (AI) takes KYC and AML compliance to the next level. AI isn't just a technology, it is a collection of related technologies which has the potential to automate workflows and quickly analyze large volumes and different types of data. AI based link analysis is a set of techniques for exploring associations among large numbers of objects of different types.

Encompass Corporation, the provider of intelligently automated Know Your Customer (KYC) solutions, today announces its expansion into North America, with office headquarters based in New York. The expansion will allow Encompass to better serve the needs of existing global clients with a presence in North America, as well as secure new clients and partnerships in the region, in a marked effort to become the undisputed lead platform for automated, corporate KYC due diligence worldwide. Alex Ford has been appointed President, North America, overseeing all aspects of the GTM, driving business growth and working with customers, partners and the Encompass team to transform KYC with automation in financial institutions and other regulated entities. Encompass has received various notable awards recognition, including'Best Solution' category for Customer Onboarding - Regulation Asia Awards for Excellence, shortlisted in the British Bank Awards, winner of Red Herring's Top 100 Europe Award and regional winner at this year's Barclays Scale Up Entrepreneur of the Year. Joining in 2012, Alex has held Executive responsibility for several business functions at Encompass Corporation including Customer Success, Operations, Marketing, Product and Delivery.

The world is becoming more connected every day. And as we connect, businesses must keep up with the latest trends to stay ahead of the competition. It can happen by using recent developments in Computer Vision and Deep Learning technologies to find out more about their customers before meeting them in person. With these advancements, organizations can now scan documents or take pictures of faces just by using a webcam – without requiring any additional information from the customer. It means that companies can offer better services while also keeping their costs down at the same time!

With so much reliance on digital payments and other financial technology (fintech), going through some form of purportedly secure, digital verification process (often referred to as'know your customer', or KYC, processes) is often par for the course these days. But with pervasive cyber threats like data breaches and identity theft delivering blows to what the end-user hopes is an un-breach-able system, "taking a single selfie just isn't enough to ensure your customer's identity [anymore]," laments Philipp Pointner, chief product officer at digital security specialist Jumio. "It leaves banks and financial institutions vulnerable to spoofing attacks as a fraudster can easily find a picture of someone else online and pass that off as genuine." "But using solutions that employ biometrics, and specifically 3D face maps and certified liveness detection, ensures the [people] behind a transaction [are] who they say they are," Pointner recently told PYMNTS. Biometrics – working in concert with a combination of artificial intelligence (AI) and machine learning (ML) to scan, analyze and then to create what could be a varied biometric identity database capable of verifying and storing fingerprints, facial features, even voice and device data – could allow for not only tougher, more meticulous identity security, but also a deeper understanding of a financial institute's customer profile – giving banks and other fintech a truer way to "know your customer".

We are living in a digital age and thus, no global financial institution can be impervious from automation and the advent of digital operative means. Banks and the financial sector were among the first automation adopters taking into account a large number of advantages of adopting IT. The reason why banking automation took pace embraced IT automation is that their operations take a lot of time and effort when done in a manual way as well as making their staff do routine activities over and over again leads to loss of productivity and lacking the opportunity for advancement on the value chain. There are several other benefits that automation can provide to the banks and financial organizations. The future is bright, despite some early setbacks in applying robotics and artificial intelligence (AI) to banking processes.

Financial technology (Fintech) companies are finding new ways to meet consumer demands and create more financial inclusion on a global scale. While Fintechs are on the rise, these companies still have to manage the same problems traditional financial institutions face: fraud. And while fraud permeates throughout nearly all aspects of a financial transaction, one particular area of concern is onboarding. Client onboarding is when a new client begins their relationship with the fintech. Companies naturally want to make this process easy and simplified, but in the financial world, this can be complicated.

The most significant fears for financial institutions and banks are regulatory compliances. In the past, regulation was seen as a barrier to enter into Financial Services. Compliances were complex, difficult to comply with, and impossibly intricate for new organizations to adopt. It is a mandate for financial institutions to clearly identify and create a risk profile for each of their customers. Let's think of a situation, where a financial organization's KYC (Know-your-customer), which is a critical part of client onboarding, fails to show up a suspicious transaction done by another financial institution due to insufficient validation of the primary documents.

"Traditional rule-based KYC-AML technology necessitates significant dependence on manual efforts particularly in alert investigation stage, which is costly, error-prone, and inefficient" The ultimate aim of any Financial Institution (FI) is to earn the confidence and faith of their customers but equally important to verify the information customers provide back to them. The regulators are increasingly concentrating on ensuring that banks have robust and effective controls in place for customer due diligence (CDD). Multinational banks need to ensure compliance not only in their home country but also in environments that are more complex and have fewer infrastructures. For Example, Deloitte has highlighted in its "Meeting new expectation" report that AML sanctions-related fines and penalties imposed in 2013 and 2014 quadrupled the total for the previous nine years. Artificial Intelligence (AI) takes KYC and AML compliance to the next level.