How Artificial Intelligence (AI) is helping us transform AML compliance and client onboarding

Anti-money laundering (AML) checks are critical for regulated businesses, but they are frequently viewed as a necessary evil. The process, particularly during new client onboarding, can be slow and cumbersome, making it expensive and delaying the start of billable work. But what if there was a way to make this process faster, more efficient, and less burdensome? In this edition of AI in Action, we explore one such solution.

The problem with traditional AML checks

Apart from expense there are a few other challenges with the traditional approach. It often focuses too much on clients who are never likely to pose a real risk and leaves insufficient resources to deal with higher-risk clients. Additionally, it means ongoing monitoring and risk analysis can be neglected, increasing the chance of missing real money laundering risks. As a result, front-line teams can become disengaged from the AML process, making it harder to spot genuine threats.

The current system requires experts and advanced tools for central review, and it is expensive and time-consuming. This causes major delays that affect overall productivity and profitability by preventing companies from beginning chargeable work on time. Furthermore, the conventional method frequently overlooks continuous monitoring and risk analysis in favour of initial checks, which can lead to missed money laundering risks.

A new way of doing things.

We’ve looked at a way to tackle these challenges head-on. Partnering with AI SaaS provider Xapien, we've help create and are using a tool that leverages artificial intelligence to speed up AML checks, allowing businesses to onboard new clients faster while strengthening their AML controls.

Our AI-powered tool automates the collection of client due diligence information, assesses risks, and gathers additional verification when needed. This means low-risk clients can be cleared quickly with minimal human involvement, reducing the setup time from days to minutes. This frees up compliance specialists to focus on higher-risk clients and ongoing monitoring.

For example, opening a matter for a bank subsidiary typically takes eight days. With our new tool, this can be done in just 10 minutes, potentially saving 700,000 to 1,000,000 hours of delay in the client onboarding process. This dramatic reduction in time not only improves efficiency but also allows businesses to start billable work much sooner, enhancing overall productivity and profitability.

“The need for faster, better and more efficient compliance has never been greater. Too much time and resource currently goes into analysing low and medium risk clients and matters and that detracts from the time required for higher risk issues." Andrew Cheung, General Counsel, Pinsent Masons

Why this matters

The traditional approach to AML compliance is no longer sufficient in today's fast-paced business environment. Companies like ours and our clients need to adapt quickly to changing regulations and emerging risks. By leveraging AI, businesses can streamline their AML processes, reduce costs, and improve their ability to detect and respond to potential threats.

Changing how law firms approach AML compliance

We've been working with Xapien for over a year now to develop this automated AML due diligence and risk assessment tool, and it's set to revolutionise how firms approach AML. The tool produces consolidated risk assessment and screening reports, allowing firms to act for new clients more quickly and start billable work sooner. We've also agreed with Xapien to white-label this product and offer it directly to clients, potentially as part of an integrated outsourced AML compliance support function.

Expanding the use of AI in compliance

The potential applications of this AI-powered tool go beyond just client onboarding. Companies can use it for suppliers or investors, asking questions that go beyond strict legal compliance. This broader approach to due diligence can help businesses make more informed decisions and manage risks more effectively.

"Firms no longer simply ask 'can we' be in business with someone, which is a straight compliance question. They ask ‘should we’? This has created a ballooning industry of laborious and time-consuming background research. Our collaboration with Pinsent Masons represents a major advancement in the application of AI to solve these compliance challenges,” says Chris Green, CEO of Xapien.

By integrating AI into their compliance processes, businesses can gain a competitive edge. They can respond more quickly to new opportunities, manage risks more effectively, and ensure they are meeting regulatory requirements. This not only improves operational efficiency but also enhances the overall resilience and sustainability of the business.

Looking ahead

The future of AML compliance lies in the integration of advanced technologies such as AI. As regulations evolve and the threat landscape becomes more complex, businesses must be able to adapt quickly and efficiently. They can use AI to streamline their processes, save money, and improve their ability to detect and respond to potential threats.

We consider our collaboration with Xapien to be a major advancement in AML compliance. Companies can enhance their overall risk management and compliance initiatives by automating repetitive tasks and concentrating human resources on higher-risk areas. This improves the company's credibility and reputation in addition to preventing money laundering. Businesses will need to incorporate AI into compliance procedures in order to stay ahead of the curve and make sure they are fulfilling legal obligations as we move forward.

What are your thoughts on using AI to streamline AML processes? Have you experienced similar challenges in your compliance efforts?

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