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Compliance Meets Artificial Intelligence

The rate of computing power is growing so quickly that by 2020, we will finally have a computer with the same raw processing power of a human brain. By 2050, we will have a computer with the same raw processing power of all human brains combined. We are seeing the computing power of machines hit a hockey stick moment and, as that power increases, so does the advent of truly artificial intelligence—machines that think on their own and learn on their own. 

AI has long been the realm of science fiction, but in compliance, it takes on a new meaning, as AI-driven computer systems can provide organizations with the ability to process huge amounts of data either in search for particular documents or to screen communications for the usage of certain words or phrases, or scanning financial transactions for signs of money laundering or other impropriety. With this kind of increase in capabilities, compliance officers are understandably interested in what AI can do for them. But first, we need to understand better what exactly AI is and does in a compliance context and where we are between the promise of the technology and what it actually delivers. 

What is artificial intelligence?

Artificial intelligence is the technology by which a machine can learn on its own, rather than relying on fresh programming code from a human counterpart. While often compared to fanciful interpretations in science fiction, AI in today’s world, and especially in a compliance function, is a far, far more primitive thing.  When we speak of AI in a compliance context, what we are generally speaking about ate data management programs that can analyze large amounts of data quickly, make key correlations between different pieces of data to draw pre-programmed conclusions (such as raising a red flag on a certain kind of transaction), and to begin to draw new conclusions based on the data it sees, subject to human interpretation and approval.

What is the difference between artificial intelligence and cognitive computing?

Artificial intelligence would advise a human operator what course of action to take based on its own analysis of the data. Cognitive computing provides the human operator with high-quality information that enables the operator to make a more informed decision.

In AI, the computer draws the conclusions. In cognitive computing, the human draws the conclusions. Most AI solutions on the market are not true AI. They are more accurately described as cognitive computing solutions. IBM’s Watson is an example of this.

Where do we see AI used most commonly in compliance?

Right now, AI is being used the most in the financial services industry, especially investments management and banking, because of the enormous amounts of daily transactions that need to be screened for money laundering, market manipulation, insider trading, third-party risk, etc. But as AI gets more advanced and qualitative in its results, it could be exported to virtually any industry that must contend with compliance requirements that involve large amounts of data.

What is the human’s role in an AI-driven system?

An AI-driven compliance system handles transactional compliance, such as checking transactions for indicators of fraud or other malfeasance, or comparing different sets of data to check for red flags. With this function automated, humans can focus on more sophisticated analysis of red flags, and more strategic compliance concerns.

How much would an AI-driven compliance system cost?

Not much, all things considered. To build a computer equivalent to IBM’s Watson would cost about $3 million. Subscribing to a Watson-like AI analytics service can generally be had for under $100 a month per user.

News Article

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Joe Mont | December 5, 2018

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GRC Announcements Blog

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GRC Announcements Blog

Senzing releases real-time AI software to help fight financial crime

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Senzing, a new artificial intelligence-based software company, recently announced the launch of its Senzing software that senses who is who in real time across multiple Big Data sources.

GRC Announcements Blog

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Steele Compliance Solutions on June 25 announced its acquisition of TransparINT, a technology company harnessing artificial intelligence (AI) to provide the next generation of compliance tools.

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White House throwing support behind AI

Joe Mont | May 14, 2018

At a day-long summit convened by the White House last week, tech industry leaders were promised support funding and outreach regarding the development and implementation of artificial intelligence.

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Jaclyn Jaeger | April 10, 2018

The U.K. Serious Fraud Office is making artificial intelligence available to all its new casework, speeding up the investigation process—and already other enforcement bodies around the world are looking to the SFO to share its experience with AI.

GRC Announcements Blog

HID Global cyber-threat service brings AI to identity and access management

GRC Announcements | April 5, 2018

HID Global has introduced a new cyber-threat and fraud detection service that brings artificial intelligence and machine learning to identity and access management, addressing the rising incidents of cyber-attacks, especially against financial institutions.

The Filing Cabinet Blog

Singapore, financial industry to develop guide on ethical use of AI

Jaclyn Jaeger | April 2, 2018

The Monetary Authority of Singapore is working with key industry stakeholders to develop a guide to promote the responsible and ethical use of artificial intelligence and data analytics by financial institutions.