Mumbai: Indian banks are now increasingly relying on AI-led tools for Financial Crime Compliance (FCC) especially as the compliance has had to be strengthened due to increasingly sophisticated financial fraud challenges. Banks can no longer rely on traditional compliance tools- manual reviews, threshold-based alerts, given that financial crime has become increasingly complex.
The RBI and SEBI are now encouraging the use of ‘responsible AI’ systems to boost FCC operations, given the rising instances of fraud and regulatory scrutiny that makes traditional rule-based systems inadequate, a report by KPMG has said.
Financial institutions are now using frameworks like the RBI’s FREE-AI and MuleHunter.AI, with more than 15 Indian banks using them to detect fraud globally. One major bank has achieved over 95% accuracy in detecting mule accounts, even as a variety of tools help banks detect money laundering attempts, fraud and suspicious transactions.
According to the World Economic Forum, the global financial economy has already spent more than $35 billion on AI adoption, with investments projected to reach up to $97 billion by 2027.
For banks, embracing AI-led fraud prevention frameworks has been an obligation, given that rising transaction values have made it almost impossible to use conventional systems for FCC. Machine learning software used here has helped banks monitor transactions in real time, checking behavioural analytics, anomalies and real-time monitoring to draft Suspicious Activity Reports using previously experienced patterns.
