SG Banks See AI Vital for AML Fight

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When it comes to catching scammers, fraudsters, and money launderers, Singaporean banks are betting big on AI. It is what the latest FICO Integrated AML Compliance Survey revealed.

The survey highlighted that 73% of Singaporean banks believe AI will strengthen anti-money laundering (AML) efforts. It noted that AI can help to address existing AML compliance challenges. These include the ability to meet new types of compliance risks in channels and products; the capacity to provide an end-to-end integrated compliance solution; and the facility to update quickly to changes in regulation.

But do not count on major AML technology refreshes anytime soon. Many of the banks are not throwing away their traditional rules-based systems, with 86% saying they believe in the efficacy of their current AML systems.

A significant majority of banks (93%) across the Asia Pacific are likely to either upgrade or enhance their compliance systems. In regional financial centers of Singapore and Hong Kong, only two-thirds of respondents indicated that their banks are likely to start new investments in compliance technology, likely due to their more significant spend in this area in recent years.

“Rules-based compliance systems continue to be the workhorse for banks in the Asia Pacific when fighting financial crime,” said Timothy Choon, FICO’s financial crimes leader in the Asia Pacific. “However, some early adopters are starting to embrace the new world of AI and realize that the decade-old rules-based systems can’t keep up with sophisticated threats on their own. 

Another challenge that is stopping AI adoption is the question of operationalizing it. Many survey respondents highlighted that they are unsure of how to proceed. 

“The secret sauce is operationalizing advanced AI technology and making it work side-by-side with the rules-based systems. In fact, 20% of respondents picked this as their principal obstacle in meeting financial crime risk mitigation targets,” said Choon.

Overall, investment in compliance technology by banks in the Asia Pacific is expected to rise in 2021. Forty-nine percent of respondents said budgets will increase, with an additional 34% expecting a significant increase. Interestingly, foreign banks are more inclined towards new spend compared with domestic counterparts. Indonesia, Australia, Thailand, and the Philippines were the markets that said they would invest the most in 2021.

“This survey, conducted in May, shows that even in the recent economic downturn triggered by the pandemic, banks remain committed to targeted spending that boosts their AML compliance defenses,” said Choon. “There is an increased willingness to perceive compliance and fraud as a common financial crime risk — a fraudster is more likely to launder money, and vice versa.

“This convergence is a global trend. Banks in the U.S. and U.K. are well on their way to fully integrating their compliance and fraud functions, bringing together teams, leaders, and technologies.  We believe banks in Asia Pacific are looking to these markets to see what will work, with plans to follow quickly in the next 24-36 months,” he added.

FICO’s Integrated AML Compliance Survey involved an online, quantitative poll of 256 senior executives from banks across eleven countries carried out on behalf of FICO by an independent research company. The countries surveyed included Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

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