What are the Major Challenges and Recent Advances in Tackling Financial Crimes?

Excerpts of Interview : Liudmyla Glashchenko, Digital Head in conversation with Abhishek Gupta – Managing Director of Effiya Technologies.

This is the second interview published as part of ‘Effiya Insights’ series; conversations on building models for predicting financial crimes, managing data quality & governance and related financial compliance product landscape.

Effiya Insights


What are the newest trends in tacking financial crime globally?

It is evolving and evolving differently in US, Europe and Asia.

US has gone into sanctions mode a lot more than otherwise. So you have sanctioned entities, sanctioned countries; those lists are ever increasing. So you need to keep a good eye in terms of sanctions and ensuring that your transactions are clean from that perspective, when it comes to US.

As far as European markets are concerned,  the onus is on doing a counterparty based due diligence, before you do the transactions, that becomes very critical. So give more deeper due diligence on the counterparties when it comes to Europe.

Asia, I think, is just still catching up to a major extent; barring a few countries here and there.


Introduction of AI into the equation is across-the-board

What is common across US, Europe and Asia, is the application of artificial intelligence to optimize;  because with all the increasing regulations and increasing number of transactions, channels, etc., they all are now struggling. So doing things physically or manually is just not an option for them. So the adoption of AI in their own ways is varying, but that’s another thing which is happening across.


How do we ensure that upcoming crime trends are still caught by our system?

The reality is that there are a lot of reports, which talks about the fact that if you are looking at the actual court filed STR’s as against the money laundered, it is a very small portion, less than 10%. Remaining 90% still goes undetected.

“Only less than 10% of the Suspicious Transaction Reports (STR) are detected, remaining 90%  still goes undetected.”

For example, when we are trying to develop a model, which is optimizing the alerts, it also gives you a list of the customers who are not alerted, but they are high risk. Now, bank needs to ensure that, and be judicious in terms of how you utilize the saved time that you have got, from some of these models.

Because while I can save you time and effort,  you might want to reinvest maybe 15% to 20% of the time flagging those customers, which you are classifying as high-risk, and your alert system is not generating or catching. So there are ways and mechanisms similarly if you have smarter algorithms, looking at the trends of the customers, looking at the networks that you have, there are many more insights that will start getting uncovered.

It’s up to the bank in terms of saying that, okay, what does it mean for me and can I catch more customers. But if you have the willingness, the technology is always available to you now, much more than ever.


Evolution of Artificial Intelligence  and financial monitoring

 At a very fundamental level, digitization of financial monitoring was, at a very rudimentary level, already artificial intelligence.

I might have applied certain formulae in excel, and then manually would have identified certain transactions,which seems high risk; and now I am using those in an automated manner, and my machine is able to identify those – that already is, to some extent AI.

The question was, is it sophisticated enough? So what was rule-driven earlier, and we are talking about machine learning based optimizations and everything else here, is just a varying sophistication of AI into the process.

The initial one was also AI, but not very sophisticated; and now with optimizations and machine learning algorithms, it has got a lot smarter and better.


About Effiya FinTech Product Suite

Effiya Technologies offers a suite of comprehensive solutions to manage anti-money laundering, transaction monitoring, fraud detection and sanctions-screening in the banking and financial services sectors. These niche products are developed from deep business insights and understanding of application areas, leveraging latest technologies and software in financial compliance space.


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