Financial Crime Crisis: Why Banks Detect Only 2% Despite Rising Spending

The report highlighted that agentic AI, an evolution of analytical AI, could significantly improve automation and productivity across the client life cycle and help banks tackle long-standing KYC/AML (know-your-customer and anti-money-laundering) challenges.

It stated "financial industry detects only about 2 per cent of global financial crime flows, despite increasing spending by up to 10 per cent a year in some advanced markets between 2015 and 2022. A potential solution lies in agentic AI--an evolution of analytical AI technology that offers automation and productivity throughout the client life cycle".

According to the report, banks worldwide are spending heavily on Know-your-customer (KYC) and anti-money-laundering activities.

However, the return on investment remains weak, with the industry continuing to detect only a small fraction of illicit financial flows.

The report noted that agentic AI could help address these issues by automating processes and enhancing the quality and speed of risk assessments.

The report also pointed out that generative AI brings three key capabilities to financial institutions, concision, which helps in summarising large datasets, content generation, and customer engagement through AI-powered bots that assist relationship managers.

Among these, concision is seeing the fastest adoption, with most surveyed institutions experimenting with gen AI in areas like early-warning systems and credit decisions.

The report cited the example of a multilateral development bank that is testing a gen AI tool capable of locating credit assessment documents, reading and synthesising the content, and drawing conclusions, reducing manual workload and improving decision-making.

The report also said many banks are taking steps to strengthen the foundation needed for wider gen AI adoption.

Around 87 per cent of surveyed institutions are hiring technology experts, while 60 per cent are training their leadership teams on gen AI and its applications.

Several banks are also setting up centers of excellence to build and maintain the architecture required for gen AI, manage deployment processes, and create frameworks and guardrails for safe implementation.

On the technology side, 31 survey respondents said they are developing secure environments and sandboxes for experimentation. Others are organising workshops, consulting external experts, and setting up governance frameworks to balance innovation with risk management.

The report concluded that AI offers transformative potential for banks, but the real impact will depend on how effectively institutions prepare for large-scale deployment.

- ANI