acquires 
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Correspondent Banking has always been considered a high-risk area for banks due to the nature of international money flows and the multiple jurisdictions of regulations to adhere to. The most famous failures noted by large banks often revolve around cross-border payments and the financial crime controls around them.
It is estimated that in 2023 $3.1 trillion in illicit funds flowed through the global financial system, funding a range of destructive crimes, including an estimated $346.7B in human trafficking, $782.9B in drug trafficking, and $11.5B in terrorist financing. (Nasdaq 2024 Global Financial Crime Report)
Unlike other businesses where banks have full customer transparency, including the types of products and services they use, correspondent banks rely on other banks’ controls and anti-money laundering (AML) regimes. Not all banks apply the same standards, and bad actors only need to find the weakest link once in a chain to exploit it.
Europol noted in 2023, nearly 70% of criminals operating in the European Union (EU) use money-laundering techniques to hide assets with increased speed of deception. This makes it even more challenging for traditional compliance measures to detect anomalies, and when it is detected authorities struggle to keep pace and prosecute.
The Rise of AI in AML Programs
In the evolving landscape of financial regulations, correspondent banks are increasingly turning to artificial intelligence (AI) to fortify their AML and counter-financing of terrorism (CFT) strategies.
According to a report by International Data Corp (IDC), global spending on artificial intelligence is expected to rise to about $450 billion by 2027, with banking as one of the largest contributors by industry at about 13%.
Because of differences in regulations and jurisdictions together with the risk appetite of each financial institution, not all banks or regions will move at the same speed to adopt AI. Global and local competitive environments, changes in regulation, and customer requirements will shape the extent to which banks will maintain a conservative or more transformative technological approach to risk management and financial crime detection.
Countries, where regulation allows customers to have more permissive use of new technologies, will force banks to catch up with increasing new money transfer alternatives. Compliance teams will need to weigh their cost of non-compliance versus the enablement and potential business growth that AI promises by enhancing robust AML/CFT programs.
The Promise of Intuitive AI-Driven Programs
Intuitive AI-driven AML/CFT programs leverage machine learning algorithms to analyze vast datasets in real-time, enabling proactive detection of suspicious activities and swift response to emerging threats. By automating routine tasks and enhancing decision-making processes, these programs empower compliance officers to focus on strategic initiatives and proactive risk management.
Four Key Areas Where Intuitive AI Helps Correspondent Banking
1. Regulatory Compliance
Intuitive AI models can quickly adapt to new regulations, automating compliance checks and providing real-time alerts to ensure ongoing adherence. Correspondent Banks can continue to align with global and local regulatory requirements. Machine learning solutions can continuously monitor regulatory changes and update models accordingly.
2. Data Optimization
Data quality is enhanced by Intuitive AI’s automatic detection and correction of anomalies, ensuring that only accurate and relevant data is processed. Intuitive AI models can use data that is labeled, unlabeled, or semi-labeled and still function effectively. Correspondent banks can benefit by still being able to detect anomalies and suspicious behavior across their vast datasets.
3. Cybersecurity
Proactively identifying and responding to potential threats is one of the benefits that Intuitive AI brings to the table, enhancing the overall security posture of correspondent banks. As criminals attempt more destructive behaviors, traditional systems can be vulnerable to cyber-attacks, making comprehensive security protocols a necessity.
4. Human Oversight
Intuitive AI systems are designed to work seamlessly with human operators, providing actionable insights while allowing for human intervention when needed.
Maintaining a balance between AI automation and human judgment is crucial for ensuring ethical and compliant practices. While AI can handle vast amounts of data and identify patterns, human expertise is necessary to interpret results and make final decisions. Thus continuous training for compliance officers on AI tools is also vital.
Embracing a New Era
The integration of intuitive AI-driven AML/CFT programs represents a transformative leap toward enhancing compliance efficiency and effectiveness. According to Deloitte, over 40% of Correspondent banks are currently leveraging AI in their AML programs, with an additional 30% planning to adopt such technologies in the next two years. Moreover, a survey by ACAMS revealed that 60% of compliance officers have expressed a keen interest in learning more about the next frontier of AI, specifically intuitive AI.
As correspondent banks navigate the complexities of modern financial landscapes, embracing intuitive AI solutions is no longer optional but essential. This new era of AI-driven AML/CFT programs offers unparalleled capabilities in regulatory compliance, data quality cybersecurity, and human oversight. By integrating these advanced technologies, correspondent banks can not only meet current challenges but also future-proof their operations against evolving threats.