The technologies leading the way in fighting financial crime

financial crime

In a world where financial crime is becoming ever more prevalent, the need to develop technologies to control is becoming ever more imperative. What are some of the technologies leading the way?

A study earlier this year found that financial crime continues to be extremely prevalent in the financial services industry and across wider sector. In the UK alone, 64% of firms experienced fraud, corruption or other economic/financial crime in 2021.

These challenges are somewhat brought on by inefficient and legacy technologies that are not meeting the standards necessary for the modern day.

Ben Marsh – CEO of iMeta Technologies – stated that many compliance professionals are still grappling with manual processes, out of date systems and inconsistent client data, with this leading to too many human errors, audit issues and a risk of not keeping pace with regulators and criminals.

 “However, there are an array of truly ground-breaking technologies on the market, spanning everything from CRM, onboarding and KYC to transaction monitoring, screening, ID&V and risk monitoring. The list could go on,” he remarked.

According to Marsh, RegTechs across the CLM spectrum are competing to differentiate themselves from one another, however, the ones likely to come out on top are those that can demonstrate how they solve the problems financial institutions are facing in the most effective way.

Marsh claims that getting vendors to actually demonstrate how they would solve your specific problem – such as realising cost savings, increasing onboarding visibility or improving the customer experience – should be a key part of the selection process.

One area that is particularly ripe for innovation is onboarding and KYC, an area the iMeta CEO describes as ‘incredibly manual’ in many large firms. “There are a huge number of point solutions as well as those claiming to solve the challenges in this space end-to-end. A key benefit of some key solutions on the market is the automation of simple manual tasks and low-risk cases, which frees up compliance to add real value by focusing only on those high-risk clients.”

For KYC, Marsh underlined that companies are looking to a ‘north star’ of perpetual KYC. While it isn’t here yet, he claims the technology is starting to move towards real-time processing of data from a wide range of data sources to bring live data feeds that update internal systems as it changes.

Another reason why innovation is so vital in the area of financial crime is that while technology may gradually improve, criminals are acting quickly as they become smarter and more sophisticated.

Marsh said that capabilities such as AI and ML are now being incorporated into AML programs, enabling FIs to analyse transaction and client behaviour to make predictions about what they may do in the future. Additionally, AI is helping AML teams to reduce ‘noise’ created by false alerts, so they can focus their efforts on investigating genuine money laundering alerts and tackle financial crime in the most effective way.

Marsh remarked, “These new evolutions in the RegTech marketplace are helping to transform the financial services industry for good, however it is also creating a market where FIs really aren’t sure who is in the zoo. Vendors can make the decision easier for their buyer by clearly communicating where they fit in the end-to-end puzzle and showing how they solve the problem the buyer is experiencing.”

A perfect storm

The need to harness technology to take the fight against financial crime may be seen as more vital than ever. In the opinion of James Brodhurst, principal consultant at Resistant AI, the financial services sector is facing a ‘perfect storm’ of challenges – with scalable and cheaply accessible financial crime techniques on the one hand, and a generally negative economic outlook and proliferation of alternative real time payments on the other.

He explained, “There will never be a silver bullet-style single solution; addressing the multiple threats being faced requires a multi-layered approach to a complex problem.  Potentially effective technologies include a greater ability for organisations to share data – a logical measure given how well criminals themselves share information and techniques. Long proven to be beneficial in the fraud prevention sphere, there is more focus being put on collaborative tech by the latest AML directives and legislation.”

Brodhurst mentioned that while more information to combat crime is ‘clearly desirable’, even more vital is the ability to make sense of escalating volumes of raw data to create actionable insight.

To manage this, he suggested that the role of AI is set to expand significantly. While acceptance has been slow for a series of reasons, this is now changing.

This has been mostly fuelled by powerful AI techniques such as sophisticated anomaly detection, ensemble modelling and network analytics, and the industry is now in a position to take advantage in a convenient and accessible way the benefits of such advanced analytics.

Brodhurst said, “AI strengthens the anti-financial crime function by overcoming inefficient processes, identifying more incidents of suspicious behaviour, promoting quicker decision making, adapting in real-time, and facilitating a firm’s scalability.

“At the same time, there is a clear appetite for innovation being encouraged by regulators. Whilst stopping short of being prescriptive in terms of tools and techniques there is now much more support for the adoption of artificial intelligence to perform some of the more repetitive and complex tasks implicated in financial crime prevention, whilst preserving the human-centric element for activities that AI does not perform so well.”


One of the most important parts of technology in its role fighting financial crime is its ability to make the fighting more efficient. While it is not a silver bullet, Chor Teh – director and industry practice lead at Moody’s Analytics – believes that if paired with good quality data, technology can very quickly make a lot of process optimisation very possible.

Teh remarked, “The maturity of technology amongst the content providers allows direct access to corporate registers and sanction databases in real-time. It also allows secured channels of user interactions when personal information is needed. Today’s RegTech offers risk assessment on the go which means if there is any missing or an important alert, it can be dealt with at the point of time.

Furthermore, he underlines technology removes the mentality of compliance being seen as a blocker of business. “It creates transparency across teams and removing unnecessary barriers in firm’s compliance operating model. Smart and real-time risk mitigation gives confidence to compliance professionals that their hard work is not jeopardised by overly focusing on client experience and speed. This includes preventing fraud that often leads to money laundering or illicit financing.”

It has long been known that technology can help various processes become more efficient, with Teh remarking that business grows and expands faster with assistance from technology. Technology also promotes dynamic risk assessments to make risk-based approaches more robust.

However, Teh believes 100% automation is not optimal in the fight against financial crime. “Automation helps create process efficiency and speeds up manual tasks, but people are still critical in understanding the difference between legitimate customers and criminals in a nuanced way,” he said.

Role of risk assessments

When dealing with regulatory matters, one of the biggest challenges and inefficiencies for companies is cumbersome manual processes.

According to Anthony Quinn – CEO of Arctic Intelligence – one of the most exciting areas of regulatory technology for financial crime is enterprise-wide financial crime risk assessments, which is a mandatory requirement for millions of regulated firms globally and is still mostly performed using spreadsheets.

What are some of the drivers of this change? Quinn believes the emergence and increase in adoption of RegTech for enterprise-risk assessments over the last few years has increased and is continuing to increase as there is a shift happening driven by a number of a key things.

He explained, “Firstly, regulatory expectations are increasing; they are expecting regulated businesses to conduct more frequent and more in-depth risk assessments, that are less subjective, based on sound methodologies and are explainable and defendable.”

Second of all, regulated firms are increasingly coming to the realisation that using home-grown or consultant-provided spreadsheets to conduct complex enterprise-wide risk assessments is no longer adequate, but there is a long way to go before this is mainstream.

Quinn continued, “Thirdly, there is an increasing focus on enterprise-wide risk assessments, through independent audits, regulatory inspections, or driven a desire by Board Directors to better understand their risks or through new risk managers looking at existing capabilities and deciding they need uplifting.”

The final reason, Quinn believes, is due to an increasing realisation that traditional GRC systems, which primarily serve as repositories of risks and controls are not flexible enough to conduct the workflow, audit trail, deployment and real-time reporting that modern enterprise risk assessments can deliver.

On the technologies driving the revolution in financial crime, Sigma Ratings CEO Stuart Jones also commented, “Fast moving developments in financial crime, a changing global risk landscape and increasing regulatory pressures are pushing global financial institutions and corporates to seek an always-on, data-driven, 360° view of risk around their clients and their clients’ associates.”

Resistant AI recently deployed its AI and machine learning financial crime prevention solution to financial crime risk data and detection technology platform ComplyAdvantage, in a new deal.

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