The AI Imperative for Sanctions and Adverse Media Screening

Sanctions screening and adverse media screening are two of the most effective processes that banks and other financial institutions (FIs) have for helping to manage and mitigate risk, particularly financial crime risk. When done well, both processes use AI to help review and adjudicate alerts with great impact, as you can see from our recent webinars, blog posts and customer stories on both processes:

AI-driven sanctions screening: webinar, blog post, customer story.

AI-driven adverse media screening: webinar, blog post and customer story.

The imperative for AI in sanctions and adverse media screening is detailed in a joint CapGemini-WorkFusion paper that demonstrates why financial institutions (FIs) must innovate – particularly in the use of AI – to both avoid running afoul of regulators and to keep pace with technologically-advanced criminals who seek to exploit the financial system.

The paper is multifaceted: it serves as a good primer about what and who gets screened in sanctions and anti-money laundering (AML) programs; it describes why adverse media monitoring is fundamental to the know your customer (KYC) process, especially when evaluating high-risk customers; it explains why both screening processes are increasingly difficult to manage.

Fortunately, AI enables FIs to overcome the difficulties in sanctions and adverse media screening alert review processes. As a result, the paper covers the reasons behind seven distinct benefits delivered by AI:

1. Increased speed, capacity and comprehensive nature of discovered data
2. Mitigated risk via continuous, real-time screening
3. Accuracy improvements in AML compliance operations
4. Reduction in false positives
5. Seamless customer due diligence
6. Complete customer records/profiles
7. Extreme auditability for both internal and external audiences (auditors, regulators, etc.)

Staying One-Step Ahead of Bad Actors

FIs need  to ramp up speed and accuracy of screening to stay ahead of criminals. Organizations don’t need to add capacity via human capital, but can rather employ AI tools to do more, faster, and more accurately.  Human analysts must go through long and laborious manual work to investigate each alert – an issue which WorkFusion delved into in even greater detail in one of our own recent papers, Removing the False Positives Noise from Adverse Media Monitoring. Too much time is wasted at FIs that lack AI tools, because they have to manually review so many alerts due to the expansion of sanctions regimes, with 99 percent of all alerts actually ending up as false positives.

Human/AI Collaboration

AI in financial crime compliance is not replacing people. In a report from research firm Celent, it showed that rather than AI taking jobs from AML professionals, organizations are using automation to increase efficiency and productivity, freeing up capacity to support risk and the business. However, there are tremendous benefits from human-machine collaboration – with an ideal blend of AI with human oversight aka human in the loop. Additionally, that position echoes a recent WorkFusion blog post on GenAI in FinCrime compliance that describes how analysts become editors of tedious work, rather than having to spend all day authoring it themselves.  By having this type of human-machine collaboration, people maintain in-depth process and data knowledge, and this helps to avoid a ‘black box process’ which regulators discourage, because they want users to be able to articulate the relationships between inputs and outputs in their sanctions and adverse media screening processes. Thus, AI’s support for model risk management is critical.

The Biggest Opportunity for AI in Financial Crime Compliance

If you’re considering leveraging AI for your financial crime compliance operations, it’s always best to have a specific use case identified. AI-based tools help banks in four overarching areas of FinCrime compliance:

1. Accountability
2. Model risk management
3. Metrics
4. Governance and documentation

Despite providing a wealth of information, the paper is only a 3-page read. Read it today.

If you would like more information about AI in financial crime compliance operations, request a demo.