Automating AML Investigations with Cloud and AI
Abstract
Financial institutions are seeking to contain the exploding operational expenses by investing in next-generation technology solutions. Specifically, artificial intelligence (AI) and machine learning (ML) powered solutions hold enormous promise for efficiency and effectiveness improvements. They are poised to transform industry practices and the solution provider landscape as new players emerge and incumbents enhance their offerings.
A recent development in this regard is Nasdaq’s entry into the AML technology solutions marketplace with the launch of its AML Investigator solution in September 2020; it is an AI-powered solution intended to automate the alert investigation process. The company followed it up with another announcement in November 2020 about its agreement to acquire Verafin, a cloud-based AML platform with more than 2,000 clients.
This Solution Brief discusses the key features of the AML Investigator solution. Nasdaq’s goal for AML Investigator is to improve efficiency of the manually intensive financial crime compliance process by fully automating all stages of the alert investigation process. According to Nasdaq, the solution can make a fully automated decision along with a supporting rationale in about 50% of cases out-of-the-box and with ongoing training and feedback, the level of automation is likely to improve further.
Nasdaq is most popularly known for running critical capital markets infrastructure; it is also a major provider of technology solutions to other market infrastructure providers, as well as to market participants in the capital markets, including buy side and sell side solutions. Banking is a new segment for Nasdaq where it is likely to face stiff competition from other upcoming players, as well as incumbents serving the industry for years. Nasdaq’s brand name and familiarity among financial institutions, technology strength including the use of next-generation technology such as cloud and AI, and its reputation of running mission-critical operations may give them an edge and help gain traction in this segment.