Thanks to the availability of advanced technology, financial crimes are becoming more sophisticated and complex. From trade-based money laundering and human trafficking to GenAI-enhanced scams, the scale of financial crime today is unprecedented.
Fortunately, artificial intelligence (AI), when used responsibly and ethically, can revolutionise the fight against these financial crimes, writes Stephanie Ora, global lead for financial crimes analytics at SAS.
Of course, AI is not a silver bullet. Even though it provides organisations with significant opportunities, the technology must be carefully managed. Businesses need to balance AI’s potential to combat financial crimes with ethical responsibility, transparency, and governance.
Fighting fire with fire
Central to the ability of AI to detect financial crime is its capacity to process and analyse massive amounts of data faster and more efficiently than any human operator. Traditional methods of fraud detection and anti-money laundering (AML) often rely on high maintenance rules and time-consuming manual processes which could otherwise be used for tasks requiring human decisions. For its part, AI enables institutions to effectively identify suspicious and complex financial crime patterns and proactively protect consumers through early warnings.
For example, AI-powered tools can dynamically segment customer profiles, detect anomalies in transactions, and even identify hidden relationships within complex networks. These capabilities help uncover schemes like trade-based money laundering and transnational criminal activities. Furthermore, integration additional elements such as entity resolution and network analytics means financial institutions can gain a more comprehensive view of the risk landscape. In doing so, they can pinpoint threats and systemic weak points more effectively.
AI also offers significant improvements in operational efficiency. By automating repetitive tasks such as alert scoring and triaging, companies can reduce false positives and ensure investigators focus on the highest-risk activities. This frees up internal resources to focus on delivering more strategic value on complex cases. By combining efficiency and accuracy, financial institutions now only transform how they address risk but improves their ability to collaborate with peers and law enforcement agencies to reduce financial crimes.
Harnessing synthetic data
One of the biggest barriers to effective financial crime detection is insufficient data. Many companies struggle with incomplete datasets. This limits their ability to train AI models comprehensively. It is here where synthetic data has become a game-changer.
Synthetic data mimics real-world data without exposing sensitive information. It allows institutions to test and optimise their financial crime control systems while safeguarding privacy. For instance, synthetic data can be used for pen-testing, ensuring that AI systems are resilient against emerging threats. By leveraging advanced tools, institutions can generate synthetic datasets that closely resemble actual scenarios, helping them improve model accuracy and performance.
Keeping the focus on ethics
However, AI systems are only as good as the data they are trained on. We have seen biases or inaccuracies in data resulting in unfair outcomes. Therefore, transparency and explainability have become critical to ensuring that AI-driven decisions are ethical and defensible.
It stands to reason that AI can also be weaponised by bad actors. For instance, synthetic financial data can be manipulated to obscure audit trails. Malicious actors can feed deceptive data into AI systems to influence decision-making. This highlights the importance of comprehensive governance frameworks that mitigate these risks while also underscoring the need for continuous monitoring.
Businesses must therefore adopt trustworthy AI practices that align with regulatory expectations and societal values. This includes integrating human oversight into the decision-making process to maintain accountability and trust.
Collaborating for success
The fight against financial crimes cannot be won in isolation. Collaboration is essential. This can include teams within companies, across public and private sectors, or through strategic partnerships with regulators and technology providers.
Public-private partnerships can, for instance, facilitate the sharing of insights, data, and best practices. In doing so, stakeholders put in place a unified front against criminal networks. Meanwhile, collaboration frameworks between human analysts and AI systems can ensure that technology enhances rather than replaces human judgment.
With financial crimes becoming more sophisticated, organisations must invest in continuous learning and innovation. Through this, they can stay ahead of emerging threats and embrace a culture of collaboration to build resilience against modern financial crimes.
AI is certainly transforming the fight against financial crimes. It provides companies with the means to detect and prevent threats faster than ever. But it does require a holistic approach that combines data governance, ethical practices, and meaningful collaboration.