AI vs Money Laundering – Why Artificial Intelligence makes perfect sense for AML

AI vs Money Laundering – Why Artificial Intelligence makes perfect sense for AML


When it comes to artificial intelligence (AI), the conversation usually consists of two groups: the enthusiasts and the critics. While the enthusiasts believe that AI will change the face of humanity, transform human life in ways we never thought possible, and increase convenience and quality of life to unprecedented levels.


On the other end of the spectrum, the critics argue that AI is just as dangerous as it is beneficial, if not more, and given enough power and control, it can turn against humans and cause harm to our well-being and in some extreme cases, may even impose a threat to our lives.


So, who’s right here? Whatever the answer may be, one thing is for certain: AI is not a distant dream anymore, but already a reality. In the short time that AI has been a part of our lives, it has already made its place in IT software, mobile operating systems, social media apps, machinery, FinTech, and more.


Given the direction that we are headed and the exponential rate at which AI is growing, it wouldn’t be a shot in the dark to say that it will eventually be used in everything humans do. AI is inevitable. From farming to gaming to music to even solving crimes.


In this article, we are going to be seeing how AI can be helpful in combating such crimes and why it is better than manual compliance, especially in the case of money laundering.


Some examples of money laundering that you may be familiar with include casinos, cyber-laundering, transaction laundering, black salaries, etc. But before we dig deeper into that, let’s first get to know what artificial intelligence is all about.

The Rise of AI



According to Investopedia, “Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.”


A good example to explain AI is the voice assistant you use in your smartphone i.e. Google’s Google Assistant, Apple’s Siri, Samsung’s Bixby, or Amazon’s Alexa.


These virtual assistants are nothing but AI software that uses voice recognition technology to understand your command and perform required action.



Similarly, the filters you use on social media apps use facial recognition technology to map out the visage from your face and augment the filters accordingly. However, AI is about more than just goofy filters or funny voice assistants.


In the long run, AI is nothing short of being game-changing. From self-driving vehicles to maps to software that manage finances and capital of multi-billion dollar giants, AI has incredible potential.

What AI means for FinTech and Security



As financial institutions continue building more technologically enhanced and sophisticated FinTech products, the need to collect, interpret, and understand big data and complex analytics has increased accordingly. In this era of rapidly growing technology, information is one of the most valuable assets one can have.


But it’s not just banks and governments that have gotten smarter and more technologically advanced. Criminals have learned their fair share of intellectual doodling as well, and many a time, they even end up outsmarting the authorities with their accounting loopholes.


And with cryptocurrency starting to become the hot new vessel for criminals to launder money and advance terrorist financing, things have become more and more complicated and harder to solve. That’s where artificial intelligence steps in.


Since AI is an extension of human intelligence, it can perform activities and fulfill tasks just the way humans do, but faster, cheaper, and more reliably since it eliminates factors such as human error, fatigue, and personal bias out of the equation.

How AI beats Manual Compliance



AML or Anti-Money Laundering is the term used to refer to the set of rules, regulations, practices, and efforts followed and performed to prevent unlawful obtaining of funds as legal income. AML is a field that deals with a lot of information and is a major hurdle for many businesses, governments, and institutions.


Given the fact that it often takes a lot of people to manage the process and comply with the regulations, the use of AI in AML practices is optimal as the algorithm can be fed with massive amounts of data and can be calibrated to treat it a specific way that mimics (and outperforms) human intelligence.


AI solutions for AML compliance practices not only reduce the burden but also provide greater levels of control over such complex data. For attaining a better solution, many consider combining the strengths of artificial intelligence and machine learning (ML) as a viable strategy.


AI helps address the challenges associated with manual compliance by eliminating the following:



  • High Costs: Growing businesses make an increasing number of transactions. To be able to keep adequate supervision, an increase in investment is required accordingly. AI helps address this by eliminating the need for as much human labor and automating repetitive processes.

  • Prone to Fatigue: Humans are prone to fatigue and are not able to sustain operating at peak performance for long hours and require constant input and motivation. AI, on the other hand, can work endlessly at max capacity allowing for faster operations.

  • Lacks Instant adaptivity: Humans usually need months or years of training to learn a new skill to adapt to the latest trends and developments. AI can do so instantly by being calibrated accordingly to perform the desired actions in a different and better way – saving time and cost.

  • Human Error and Bias: Humans are finicky. Even the most trained and skilled minds are not immune to making silly mistakes. On top of that, people have their own biases and that is simply not affordable when dealing with data related to financial crime.


Thank you for reading this article. We hope you gain some valuable perspective as to what artificial intelligence is, how it functions, and why it acts as a good substitute for manual compliance.

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