Artificial Intelligence (AI) – The requirements of digital business platforms involve regular online transactions, and where there is money involved, there are always risks of crime. Perpetrators use technology to their advantage to create new ways to delude the system. This results in unpleasant outcomes for financial institutions, with money laundering and terrorist financing being major issues.
In simple terms, there need to be systems to track and monitor daily activities in these financial institutions. AI in the wrong hands allows fraudsters to target organizations by sending emails that appear to be legitimate, consequently fooling the execution team into carrying out undesirable tasks.
For this reason, AI technology needs to be used in the right way to prevent cybercrime. AI has been around for quite some time now and is already implemented by established businesses worldwide. According to research, the AI market will grow from around 29.86 billion dollars in 2020 to 299.64 billion dollars by 2026.
Risks to Financial Institutions
Financial institutions are most affected by data breaches and money laundering because, obviously, money is what matters. Online banking systems usually face the risks of account takeovers by cybercriminals, usually pertaining to stolen identities or credentials.
Cybercrime in Business
Cybercrime has always been a threat for businesses. The fear is justifiable though, because cybercriminals are also empowered with the weapon of AI, and they have become smarter than ever. Everyone knows phishing attacks and data breaches are, but what cybercriminals are able to do with AI is not easy to guess. In some cases, they can make the entire internet system of a company go offline, which consequently has detrimental effects.
Time is money, and productive time lost because of such attacks by cybercriminals affects the company’s reputation. This is because customers lose trust in the company when their expectations are not met, or in unfortunate events involving data breaches. Not to mention, the cost required to implement changes in order to overcome the losses.
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Lack of Proper Technology
One of the most important aspects that differentiate one company from another is innovation. Staying one step ahead obviously adds value, but it also changes the way the company operates. For those that do not stay updated, it is not difficult for cybercriminals to diminish their market value.
The financial sector is an industry that faces constant changes, and new technologies are both a threat, and if implemented correctly, the solution to make systems efficient. The term survival of the fittest applies here, as organizations that do not implement AI technology to secure their systems just won’t make it to the future.
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Stained Reputation
Every organization does, and should, fear a bad reputation. It’s not difficult to understand that reputation is everything when it comes to customers choosing between one company from a list of several other options.
On the bright side, customers stay loyal to those companies that impose certain standards, allowing them to counter financial crime and provide security.
In order to acquire a good reputation, a company must provide remarkable services and prices, but more importantly, they should implement security systems using AI technology. AI technology in itself is an assurance of a secure system for the customers.
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Money Laundering
Money laundering is a process through which criminals make illegally obtained funds appear legitimate. This serious crime is also one of the greatest fears of all financial institutions. In some cases, the institution accidentally gets involved in the crime by aiding the illicit transactions. Making the money from unknown sources legal involves shifting it between different bank accounts, leaving no trace of the origins. Money laundering cases result in heavy losses to the financial institution itself when they don’t implement proper AML (Anti Money Laundering) systems to counter this crime.
AI to the Rescue
AI is replacing manual systems and decision-making in many fields, but is it as effective as the human brain? In simple words, AI is the intelligence that is given to a machine by using data and instructions. The advancements in the algorithms of AI allow the software to use sophisticated mitigation techniques to identify the risk of financial crime.
Overcoming corruption and money laundering requires super-efficient AML systems which have enough relevant data to track suspicious transactions. Activities like switching money between bank accounts, sudden increases or decreases in transaction amounts, or even changes in the customer’s usual activities can be monitored using these systems, which is why it has been made mandatory for organizations around the world to incorporate AML systems.
How Effective are AI and ML?
Anti-Money Laundering procedures are designed to deal with financial crimes in the excessively digitized systems of today’s banks, government institutions, and so on.
Improved security measures are not just the demand, but also the necessity for organizations. KYC/AML systems are used by organizations to investigate the background of a potential customer by conducting a search of everything from their transaction history to their possible presence in any of the wanted lists around the world. Designers of the AI system play an important role as they go one step further and beat fraudsters at their game.
Concluding the Above
In summary, using Artificial Intelligence, it’s not a tough task to collect the user’s personal information and confirm their identity by matching it with the database records. It simply analyzes the facial data from a selfie of the potential customer in question. This technology allows this to be done in real-time and is indeed very efficient. Hence it’s safe to say that AI has become an effective countermeasure for cybercrime, as well as automating financial systems.
