AI Meets AML: Reinventing Risk Management Through Public Data

In the dynamic world of finance and fast-changing geopolitical situations, risk management is central to decision-making processes. Financial institutions face numerous challenges, including fraud, money laundering, sanction evasion, and reputational risks. A pivotal strategy in mitigating these risks is conducting enhanced due diligence on potential customers and business partners through the analysis of publicly available information. This approach offers a more comprehensive and nuanced perspective on potential risks compared to relying solely on information from structured databases.

Significance of Public Information Screening

Public information screening serves multiple critical functions within financial institutions, acting as a safeguard against potential risks by uncovering red flags such as past fraudulent activities, legal disputes, and other negative aspects that could influence future cooperation. Reviewing news articles, legal records, and other public documents can reveal involvement in money laundering, financial fraud, or organized crime, enabling institutions to avoid high-risk associations. Moreover, regulatory frameworks mandate strict compliance measures to prevent financial crimes, and public information screening assists in identifying individuals or entities engaged in such activities, ensuring adherence to laws and regulations. There are various approaches to regulatory requirements in different countries; however, the EU leads the way. Soon, there will be a new EU initiative designed to provide centralized access to publicly available financial and sustainability-related information about companies within the European Union: The European Single Access Point (ESAP). Initiatives like this help financial institutions preserve their credibility while leveraging comprehensive public information for informed decision-making, aligning partnerships and customer relationships with strategic goals and risk tolerance.

Challenges in Public Information Screening

Despite its importance, public information screening presents several challenges. Manual information screening necessitates the use of multiple keywords to thoroughly search various public records. This process is not only labor-intensive and expensive but also prone to human error, leading to potential oversights in risk identification. Organizations must allocate substantial resources to perform these exhaustive searches, diverting attention from other critical tasks.

The global nature of financial transactions means that information is often disseminated across various languages. Manually screening data in multiple languages is a very complex task, as it requires proficiency in numerous languages. This complexity increases the likelihood of missing information, thereby elevating the risk of non-compliance with international regulations.

From Onboarding to Ongoing Risk Checks

It is not only important to check a customer’s background and publicly available information during the onboarding process but also to continuously monitor this information in alignment with their risk level. Customer risk is dynamic and can change over time due to various factors such as financial activities, legal status, or associations with high-risk entities. Ongoing monitoring ensures that financial institutions can detect emerging risks, suspicious behaviors, or compliance violations early, allowing for timely intervention. By linking monitoring efforts to a customer’s risk profile, organizations can apply appropriate levels of scrutiny—intensifying checks for high-risk customers while reducing unnecessary manual reviews for lower-risk ones.

Leveraging Artificial Intelligence Technologies

Manual public information screening has challenges, including time constraints and linguistic barriers. To overcome these challenges, financial institutions are increasingly turning to automated screening solutions powered by various Artificial Intelligence technologies. These technologies can process vast amounts of data across multiple languages, significantly reducing the time and human resources required for screenings and minimizing the risk of errors.

Fintelligence, a Latvian startup, uses the newest Artificial Intelligence technologies to search and analyze publicly available information about companies and individuals in over 100 languages. Its IT solution detects potential risks that may impact the onboarding of new customers and partners, as well as the continued collaboration with existing ones. The Fintelligence solution identifies negative information, including anti-money laundering (AML) risks, fraud risks, Environmental, Social, and Governance (ESG) risks, connections to Russia, and support for war activities.

Fintelligence offers two primary access methods for its solutions. The first is a web platform that provides a user-friendly interface, allowing users to log in with a username and password to conduct searches and automatically generate reports about entities. The second is an API solution that enables seamless integration with other systems, enhancing middle- and large-sized financial institutions' workflow efficiency and facilitating automation and customization of the reputation check process.

In today's global landscape, the Fintelligence team sees that the need for thorough information verification extends beyond the financial industry. Our customers represent different industries such as real estate, investment funds, venture capital funds, gambling, legal services, and procurement processes. By offering sophisticated reputation-checking solutions, Fintelligence assists clients in assessing potential risks and making informed decisions across these diverse industries.

Fintelligence CEO Liga Vinkele emphasizes the importance of leveraging the latest AI technologies to help organizations enhance their public information screening processes, leading to more robust risk management and compliance frameworks. These novel AI solutions not only streamline operations but also ensure that organizations remain vigilant against emerging risks in an increasingly complex global environment.