Flashy artificial intelligence (AI) applications like generative art and self-driving cars might dominate today’s headlines. Ut ai and machine learning (ML) are playing a quiet background role in our lives, writes James Saunders, co-founder and chief technology officer of RelyComply.
Nowhere is this more apparent than in financial services, where AI systems are increasingly protecting our financial system and its customers.
As you go about your everyday banking, AI and ML are becoming more present, from systems that alert your bank to unusual transactions that may flag a fraud risk to the models banks use to decide whether to grant you a home loan. Whenever you use a banking app or card, a web of algorithms behind the scenes makes it happen.
When you log in to online banking, for example, sophisticated systems monitor login behaviour, device patterns, and network locations in real time to ensure it’s you rather than a fraudster halfway across the world. Intelligent processes monitor behaviour and unusual patterns when you send a payment to a friend or pay a utility bill online.
Perhaps one of the most important applications of digital technology is Regulatory Technology (RegTech) solutions for Anti-Money Laundering (AML) and Know-Your-Customer (KYC) regulations.
These systems play a critical role in helping financial institutions meet the requirements of regulations like FICA (Financial Intelligence Centre Act), which mandates the identification and verification of all customers to prevent financial crimes like money laundering and terrorist financing.
The global effort to fight fincrime
While ID verification and security checks can feel inconvenient and intrusive to you as a customer, they are part of a broader national and global effort to build a safer, more transparent financial system for everyone. It’s not only about protecting individual users, but also disrupting organised crime and illicit financial flows.
This is particularly important in the context of South Africa’s greylisting by the Financial Action Task Force (FATF) in 2023. While greylisting introduced tighter scrutiny on local financial flows, it also prompted a wave of innovation, especially in RegTech solutions.
Criminals conducting Illicit Financial Flows (IFFs), which involve proceeds from crime or money used to fund illegal activity, have developed sophisticated ways to bypass banks’ checks and systems. Companies like ours develop technology to stop these criminals while minimising costs for banks and inconvenience to everyday people.
Our systems help banks make rapid checks during their verifications of a new customer or a payee, such as affiliations with politically exposed persons, on a sanctioned list, or based in a country known for poor KYC/AML measures. They also help them quickly verify whether a person is who they say they are, protecting you from ID fraud.
Modern AML and KYC platforms use real-time risk detection to screen every transaction for anomalies. For example, if a transaction pattern matches those seen in known criminal networks, the system can flag it instantly. Or if a transaction appears to be funded by unexplained income, it will alert the bank’s team to investigate.
AI helps reduce false positives in situations where legitimate transactions are incorrectly blocked. Older systems often erred on the side of caution, frustrating customers. Today’s tech improves accuracy, decreasing the chances you, as a legitimate customer, will be inconvenienced by a delay in your transactions.
AI-powered AML in action
This dual role of fighting financial crime while enhancing convenience makes AI-enabled RegTech valuable in today’s compliance environment. This is FICA compliance reimagined for the digital age, allowing banks to know their customers while keeping the bad guys out.
Here’s how it typically works in practice when you apply online for a financial product:
- You select the product and begin the digital onboarding process.
- The system prompts you to take a selfie, which checks for “liveness” to ensure you’re a real person, not a spoof or deepfake.
- The platform offers real-time feedback to help you capture a usable image, reducing frustration from blurry or low-light photos.
- That image is matched against government records and other trusted data sources to verify your identity and possible associations.
All these checks occur instantaneously. Your verification is confirmed within two to five seconds, and no manual paperwork is required.
This technology has transformed financial services over the past decade. Today, the need to go to a bank branch to present your ID and proof of address is becoming less common. You can pretty much do it all online. In addition to convenience, it has opened the banking market to a range of neobanks and fintech, increasing choice, competition, and financial inclusion.
However, the impact on the economy is arguably as significant. By making it harder for criminals to launder money, funnel illicit gains, or impersonate legitimate users, AI-powered compliance tools support a more secure and transparent financial environment for everyone.
In South Africa, tackling corruption, money laundering, and organised crime is essential for restoring global investor confidence. Each time we stop a money launderer or identify flows of corrupt money, we are taking a step towards building economic stability and trust in our financial system.