Majority of banks believe that AI will stop money laundering: survey

86% still believe in older rules-based technology for AML compliance.

Seven in 10 or 73% of Singaporean banks believe that artificial intelligence (AI) will strengthen money laundering efforts, according to a survey by analytics software firm FICO.

More lenders (86%) say they still believe in the ability of the older rules-based technology, AML systems—although 36% admitted that they experience significant struggles in modifying them.

“Rules-based compliance systems continue to be the workhorse for banks in APAC when fighting financial crime,” noted Timothy Choon, FICO’s financial crime leader in APAC.

“However, some early adopters are starting to embrace the new world of AI and realise that the decade-old rules-based systems can’t keep up with sophisticated threats on their own.

Meanwhile, 95% of Singaporean banks said they will continue to invest in compliance in the year ahead and 23% plan to significantly increase this investment in 2021.

However, only two-thirds of banks in Singapore indicated that they will start new investments in compliance technology vs 93% across APAC. This may be due to their more significant spend in this area in recent years, according to FICO.

Compliance woes
One struggle named by banks is in operationalizing advanced AI technology and making it work side-by-side with the rules-based systems, with 20% of respondents naming this as their principal obstacle in meeting financial crime risk mitigation targets.

Key challenges named by banks for existing AML compliance solutions regionally were 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.

Overall levels of investment in compliance technology by APAC lenders are expected to rise in 2021, with 49% of respondents indicating that they will increase their budgets. An additional 34% also expect a significant increase.

FICO noted that foreign banks are more inclined towards new spend compared with domestic counterparts. Indonesia, Australia, Thailand and the Philippines were the markets that said they would invest the most in 2021.

Meanwhile, across APAC, larger multinational banks were more likely to use a vendor solution for AML. However, domestic banks more commonly command an in-house system.