QuantaVerse, innovator of data science and artificial intelligence (AI) solutions purpose-built for identifying financial crimes, today announced a complimentary analysis that financial institutions can use to test the effectiveness of their AML programs. The CCO (Chief Compliance Officer) Checkup is a free service whereby QuantaVerse’s AI solution will analyze transaction data to detect “false negatives” or anomalous behaviors that may have been missed by an institution’s existing transaction monitoring system (TMS).
These risks take the form of fines, penalties and forfeitures for violations of BSA and other regulations. Despite increased investments in AML systems, this risk is increasing year over year. In 2016 alone, $42 billion in fines for AML non-compliance were paid to federal regulators by the largest North American and European financial institutions.
Transaction monitoring technology is essential for the maintenance of an effective AML program. However, transaction monitoring systems are failing to flag many transactions that represent serious risks for financial institutions. Legacy TMS are incomplete because they rely solely on rules-based engines. If a financial crime does not violate a stated rule, the TMS won’t flag it. Unlike static rules-based TM engines, AI-enhanced systems are dynamic in that they can detect patterns of behavior and analyze the intent of those patterns to identify suspicious activities.
The QuantaVerse solution also provides financial institutions with a virtuous feedback loop that improves performance of their TMS by recommending new rules for catching new criminal behavior patterns that are uncovered during AI analysis. This provides financial intuitions with documented guidance on TMS rule scenarios and model tuning and drives continuous improvement of their AML efforts over time.
Financial institutions can take full advantage of QuantaVerse’s CCO Checkup with minimal effort and no long-term commitment. Included in the CCO Checkup, participating financial institutions receive a QuantaVerse Financial Crimes Report (FCR) detailing the five cases scored highest by the AI solution and representing the greatest risk to the institution. The QuantaVerse FCR also includes all the supporting documentation necessary for the case to be efficiently analyzed by an AML investigator and all that is required for a suspicious activity report (SAR) to be created if indicated.
In one CCO Checkup, the analysis of a single month’s worth of previously unflagged transaction data detected thousands of end-clients who had originated suspicious transactions, representing tens of millions of dollars of likely illicit cash flows. One end client, in particular, generated suspicious transactions totaling millions of dollars that were worthy of closer examination.
“Money laundering continues to be a serious problem for banks. Fortunately, advancements in AI and machine learning technologies promise to greatly reduce the risk these transactions represent,” explains David McLaughlin, CEO and Founder of QuantaVerse. “Our CCO Checkup provides financial institutions a fast, no-cost method to evaluate an AI-powered solution, while also dramatically lowering BSA risks. They will see first-hand how AI can easily improve upon the effectiveness of their existing TMS and AML processes while greatly reducing their exposure to fines and reputational damage.”