Google Cloud Uses AI to Create Anti-money Laundering Technology
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Google Cloud has unveiled another AI-powered product. After Google previously released MusicLM — a music-generating AI service, it now created an AI-powered tool for combating money laundering. The new AML service will supposedly be able to help with detection of money laundering, allowing the authorities to improve the security of the financial systems.
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Money laundering involves around $2 trillion annually
Money laundering has been a problem for decades, and banks worldwide have committed massive resources toward solving it. Unfortunately, the solutions were never good enough, as money launderers keep finding new ways to bypass all the barriers the banks have invented.
Also, the amount of money laundered every year is estimated to be two and five percent of the global GDP, which is approximately $2 trillion annually, according to the UN. Now, Google seems to believe that Google Cloud’s new product could contribute to solving the issue, or at least reducing its severity.
According to the company, most legacy AML monitoring products rely on manually defined rules. These solutions have brought low rates of identifying suspicious activities. The company estimated that over 95% of system-generated alerts ended up being false positives, and that was only in the first phase of the review. Meanwhile, 98% of money laundering cases have never led to a suspicious activity report.
How does Google Cloud’s solution work?
Google Cloud’s answer to the problem will provide a consolidated ML-generated customer risk score. This comes as an alternative to traditional rule-based transaction alerting. Essentially, the risk score is based on the bank’s information, such as network behavior, and transactional patterns, as well as know your customer (KYC) data.
Armed with this information, the AI product will be able to identify instances or groups of high-risk retail and commercial users.
Google further added that its new AML technology would not only increase risk detection. In addition to that, it will lower the operational costs while also boosting user experience.
HSBC tested the system with positive remarks
HSBC already used the system, which reported that it managed to spot two to four instances involving suspicious activity. At the same time, the alert volumes went down by 60%.
HSBC’s group head of financial crime risk and compliance, Jennifer Calvery, commented on Google Cloud’s new product. She said: “Google Cloud’s AML AI has significantly improved HSBC’s AML detection capability. Google’s models are already demonstrating the tremendous potential of machine learning to transform anti-financial crime efforts in the industry at large.”
With a positive review from its first tester, likely, other banks might soon start adopting the new technology. At the same time, the product also opened the door for AI solutions for unresolved problems due to oversight, human error, outdated technology, and alike.
