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Alphabet’s cloud business, Google Cloud, has launched a new AI-driven anti-money laundering (AML) product — Anti Money Laundering AI — that aims to assist clients in the financial sector with regulatory compliance and identifying potentially suspicious activity.
While other tools on the market also utilize machine learning, Google Cloud distinguishes itself by eliminating the need for rules-based programming typically employed in AML surveillance programs. This decision challenges the prevailing approach in the industry.
The newly unveiled product has attracted notable users, including London-based HSBC, Brazil’s Banco Bradesco, and Danish digital bank Lunar. This release coincides with major US tech companies showcasing their artificial intelligence capabilities and a corporate race to integrate AI into various industries.
While the traditional artificial intelligence methods involve a combination of human judgement and machine learning technology to identify activity that may require further investigation or reporting to regulators, Google Cloud’s departure from rules-based inputs is a bet on AI’s ability to solve persistent problems in the financial sector.
The effectiveness of anti-money laundering tools depends on their calibration, as few alerts can raise concerns from regulators. At the same time, an excessive number can overwhelm compliance staff responsible for reviewing and reporting suspicious activity.
Google Cloud’s executives argue that manually inputted rules contribute to the high number of false positives generated by existing systems, which can be as high as 95%. Users cannot input rules directly with the new product but can customise the tool using their own risk indicators or typologies.
By adopting an AI-first approach, Google Cloud claims that HSBC experienced up to a 60% reduction in alerts, accompanied by increased accuracy.
While some financial institutions may be hesitant to relinquish control to a machine-learning model, Google Cloud aims to address concerns through its product’s “explainability” feature. Instead of solely providing transaction alerts, the system utilizes a broader range of data to identify high-risk customers and offers contextual information to analysts to enhance understanding.
The technology developed by Google Cloud represents a “fundamental paradigm shift in how we detect unusual activity in our customers and their accounts”, Jennifer Shasky Calvery, head of financial crime risk and compliance at HSBC, told The Wall Street Journal.
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