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Corporate Compliance Insights
Home Featured

The Multiple Benefits of Artificial Intelligence

by Michael McDonald
May 30, 2017
in Featured, Fraud
futuristic vision concept with businessman

Driving Efficiency and Heading Off Compliance Issues

Compliance departments already monitor emails for nefarious keywords, but expecting even the biggest compliance departments to monitor all communication in real time is arduous and nearly impossible using only human capital. Unless they’re using artificial intelligence.

“Sure thing.” “Guaranteed return.” These are terms compliance departments already monitor for in employee communication, but it’s a tediously manual, reactionary process. Due to regulation changes and policy updates, regulated industries must take a proactive approach to adhering to the rules. While manually scanning emails for nefarious keywords is one way to head off potential compliance issues, that alone doesn’t account for the mass amounts of text and voice files that must be monitored, the time it takes to ensure each document is thoroughly reviewed and an issue is settled or the continued tracking of regulatory updates to ensure compliance of the most recent policies.

Expecting even the biggest compliance departments to be on top of changes and constantly reviewing material in real time is arduous and nearly impossible using only human capital. That is why compliance departments and businesses in regulated industries are turning to artificial intelligence (AI) to augment internal processes. Whether it’s being used to help with anti-money laundering programs, know-your-customer checks, sanctions list monitoring, billing fraud oversight or other general compliance functions, artificial intelligence can improve efficiency, weed out false-positive results, cut costs and make better use of workers’ time and company resources. Find out how AI can be leveraged for compliance below.

Prevent Potential Issues with Instant Alerts of Noncompliant Language

Huge volumes of data, including conversations from phone recordings, chats and emails can now be analyzed using cognitive engines built specifically to understand financial trading and noncompliant language. Using natural language processing, transcription, translation and voice and text analysis algorithms, cognitive engines are able to determine unusual employee behavior and flag terms so management can address issues. Not only can this contextual analysis help save businesses money by avoiding fines, AI can be deployed to eradicate accidental (or purposeful) market manipulation and collusion activities. Big banks, hospitals and pharmaceutical companies can use AI to identify compliance issues before they’re flagged by the SEC or other regulatory industry, saving themselves millions in fines.

Weed Out False Positives and Identify True Compliance Risks

Businesses and compliance departments understand the paralyzing effect a breach of compliance could have on the organization, as each flagged instance becomes a case that must be thoroughly reviewed. But the strict guidelines in place to follow regulations have created a bottleneck. Fearful of missing a risk and using pattern detection to streamline the process, many cases end up being false positives. This not only wastes time as members must resolve the case, it can lead to serious detection challenges such as “data” overload (missing the important instances), alert overload (too many false alarms) and gaps in the skills needed to quickly recognize a real event.

For example, large banks may have to wade through 300,000 cash transactions of $10,000 or more every month as part of their anti-money laundering programs. The vast majority of these cases are false positives, but that still leaves around 1,000 or so cases to be investigated. Leveraging AI, compliance departments can quickly identify anomalies and sift out which cases need to be investigated and which cases are false positives.

Focus on Business-Critical Efforts Instead of Monitoring Call and Text Communication

Organizations opted to increase the amount of compliance-related positions to account for growth and to adhere to the strict guidelines. In the banking industry alone, compliance and regulation costs $270 billion a year and accounts for 10 percent of operating costs. However, as stated above, each case can take several hours to review before determining a false positive, which can make employees blind to differences. It also monopolizes their time, which could be better spent resolving true compliance events. Not only can AI assist in weeding out the false positive cases, it can streamline the review process, allowing employees to spend time on critical business initiatives.

Identify Regulation and Policy Updates

In addition to fending off potential compliance issues, companies and compliance departments are also obligated to understand the most current regulations around the world. This is a daunting and expensive expectation. Consulting firm Accenture says the cost of complying with these rules has risen 50 percent in the past three years as a number of new, country-specific regulations have come into play.

Cognitive engines have been created to understand and analyze the high volume of regulatory changes and can ensure a business is aware of the most up-to-date policies. Natural language processing engines can parse regulatory text and pattern match with a cluster of keywords to identify the changes per geographic location relevant to the organization.

As regulated industries continue to adhere to new rules and policies, AI will be an increasingly valuable tool. Cognitive engines can augment compliance-tasks, streamline processes and analyze data quickly and efficiently so employees can spend their time on real issues that impact a business’s bottom line.


Tags: Artificial Intelligence/A.I.
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Michael McDonald

Michael McDonald is General Manager of Legal and Compliance at Veritone. He has more than a decade of experience in legal, IT and software.

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