Reporting suspicious activities to the regulators is a vital yet complex procedure, owing to its time-consuming effort. Here's how AI can help.

February 9, 2022 1 minute read

AI in Regtech: How to Power Up Your AML Reporting Process with AI

Reporting suspicious activities to the regulators is a vital yet complex procedure, owing to its time-consuming effort. Here's how AI can help.

In the previous post in this series, we discussed how it’s important for firms to have systems and processes in place that can detect instances of potential money laundering and other financial crime, and how AI-powered regulatory technology (‘regtech’) tools can do this much more accurately than human operators.

In the final post of this series, we’re going to look at reporting and how artificial intelligence (AI) can be used to help firms submit information to regulators in a more timely and efficient fashion.

What is Reporting in Regulatory Compliance?

Reporting in regulatory compliance is the reporting of suspicious client activity by firms to regulators. When firms detect suspicious activity, they have a duty to report it in a timely manner.

The process for reporting potential instances of money laundering can differ between jurisdictions, however, and this can lead to confusion and procedures not being followed correctly. In the UK, for example, where money laundering is suspected, this must be reported to a firm’s money laundering officer or another responsible person who must then report it to the National Crime Agency via a suspicious activity report.

Throw in the complexity that can arise when trying to organize all the relevant data and information that’s available prior to submission and then filling out the relevant paperwork and you have yourself a burdensome process that’s crying out for tech-led innovation. And that’s why more firms are relying on AI-powered regtech tools that can handle the bulk of the reporting process for them.

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How is AI Used in the RegTech Reporting Process?

AI can be utilized in the reporting process in many ways, for example:

  • Report generation: AI can be used to pre-populate reports with relevant data and information using standardized language and terminology. This simplifies the process and creates synergies between reporting firms and regulatory bodies.
  • Demystify jurisdictional variations: An AI-backed regtech tool can stay on top of the different reporting rules and frameworks of different jurisdictions so that compliance teams don’t have to. AI can also stay ahead of the latest updates to ensure that reports are always submitted in line with the latest requirements.
  • Automating data management: By automating data management processes, firms can ensure that the correct data is being collected and reported on time.

Letting AI Take the Lead in Compliance

Money laundering as a financial crime is fast becoming a more sophisticated problem, and regulators are making substantial efforts to try and fight it.

Financial firms should recognize the part they play in the fight against financial crime let AI take a leading role in their compliance efforts by leveraging regtech tools and automation.

With the help of powerful AI models, the latest regtech tools are disrupting the industry by providing firms with tech-led solutions to the demanding regulatory and compliance landscape.

By automating compliance tasks, firms not only help to prevent and detect fraud but also benefit from a more robust compliance regime, lower operating costs, and reduced risk exposure among other things.

Firms should therefore be looking to get ahead of the trend by leveraging the power of AI-backed regtech tools and changing from being reactive to proactive when it comes to money laundering by adopting AI in all steps of the process – from onboarding to ongoing monitoring, detection, and reporting.

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