EXCLUSIVE – Financial crime detecting platform QuantaVerse has added a new AI-based service to allow its financial institutions and banking clients better detect fraud and other crimes through audit investigations, as these crimes continue to be a major concern for banks and non-banks alike. The new CAE (Chief Audit Executive) Checkup service unveiled today uses the startup's AI Financial Crime Platform to analyze data and detect insider threats, bribery, corruption, money laundering, fraud, terrorism financing, and third-party risks. This can be done without having the audit team manual create models and study samples for anomalies to catch financial misbehavior. "With this new technology, audit departments can look at the entire transaction history of the year to spot anomalies," David McLaughlin, CEO and founder of QuantaVerse, told Bank Innovation. "That not only reduces risks, but also saves these internal audit teams resources and time."

In this special guest feature, David McLaughlin, CEO and Founder of QuantaVerse, discusses how advancements in data science, including artificial intelligence (AI), machine learning and big data, promise to stifle money laundering and change outcomes for victims around the globe. Financial institutions have begun working smarter through the use of AI and machine learning to help banks dramatically improve the efficiency and effectiveness of money laundering investigations. David McLaughlin is CEO and founder of QuantaVerse, an innovator of data science and artificial intelligence (AI) solutions purpose-built for identifying financial crimes. David spent six years as a naval officer, starting in 1986 as an Ensign in the U.S. Navy and attending flight school in Pensacola, FL. He is a graduate from the highly regarded TOPGUN program, and completed a combat tour in the Persian Gulf where he was awarded the Distinguished Flying Cross and two Air Medals for bravery in combat. Prior to founding QuantaVerse, David held senior executive positions with IPR International, NES Financial and SEI.

I was talking to a banking compliance executive recently about how banks are looking to use artificial intelligence to spot clues to crimes being committed by customers or employees. This executive was clearly not buying into the hype. "We've thought about that, but we don't plan to use it at this time," she said. "There's too much risk of innocent people getting caught up in a dragnet." An AI engine could find a pattern of transactions or behavior among law-abiding customers that mimics money laundering or some other crime.

One thing that makes ISIS so hard to fight is that the terrorist network is diffuse and scattered, with small cells of operatives all over the world. Not only does this make it hard for law enforcement to predict where the group might strike next; it makes it incredibly complicated to track activity on the network--activity like banking transactions. Small sums of money flow from foreign fighter to foreign fighter, yet banks struggle to identify it within their systems. Banks have long used anti-money laundering systems to flag suspicious activity, and in the aftermath of September 11th, they have turned to those same legacy tools to catch terror-related transactions, too. But these legacy tools are not up to the job.

Wayne, PA (June 7, 2017) –QuantaVerse, innovator of data science and artificial intelligence (AI) solutions purpose-built for identifying financial crimes, today announced a complimentary analysis that financial institutions can use to test the effectiveness of their AML programs. The CCO (Chief Compliance Officer) Checkup is a free service whereby QuantaVerse's AI solution will analyze transaction data to detect "false negatives" or anomalous behaviors that may have been missed by an institution's existing transaction monitoring system (TMS). These risks take the form of fines, penalties and forfeitures for violations of BSA and other regulations. Despite increased investments in AML systems, this risk is increasing year over year. In 2016 alone, $42 billion in fines for AML non-compliance were paid to federal regulators by the largest North American and European financial institutions.

New York State's Anti-Terrorism Transaction Monitoring and Filtering Program Regulation requires New York DFS-regulated financial institutions to "maintain programs to monitor and filter transactions for potential Bank Secrecy Act (BSA) and AML violations and prevent transactions with sanctioned entities, and certify compliance with the regulation annually to DFS." Significant to this new regulation is that institutions must review their transaction monitoring programs to ensure they comply with regulatory safeguards. Institutions must also adopt either an annual board resolution or senior compliance officer attestation to certify compliance with the DFS regulation beginning April 15, 2018. QuantaVerse is uniquely able to provide institutions and their senior compliance leadership with data-driven solutions to enhance their existing transaction monitoring systems. QuantaVerse employs state-of-the-art proprietary algorithms to find hidden risks in the flood of transaction data that institutions deal with daily. QuantaVerse's data analysis is powered by artificial intelligence that helps institutions identify where their risks are today and where they are migrating.

Concerned about potential regulatory fines and skyrocketing costs, the world's largest banks are turning to artificial intelligence to improve their compliance with know-your-customer and anti-money laundering regulations. "The value proposition for AI solutions is highest for large banks with significant volumes, complexity, multiple lines of business and geographical reach as these banks are affected most by the current challenges and stand to benefit the most by adopting new and innovative solutions," write Arin Ray and Neil Katkov, analysts with Celent in a new research report entitled "Artificial Intelligence in KYC-AML: Enabling the Next Level of Operational Efficiency." The analysts predict that global tier-one and large regional banks will be early adopters of AI over the next three years. Ray and Katkov's conclusions match the findings of a survey of 424 executives from financial services and fintech companies released in March by Chicago-based law firm Baker McKenzie. The firm found that 29 percent are thinking about using AI in know-your customer and anti-money laundering monitoring.