The Evolution of Anti-Money Laundering (AML) in the AI Era

   

The Stakes of Financial Crime Prevention

The battle against financial crimes is critical, supporting efforts to combat organized fraud, human trafficking, and drug trade. This fight demands that investigators be increasingly agile, efficient, and thorough in their approach. The consequences are significant, often a matter of life and death.

Emerging Skills in AML

The AML field is evolving, with key skills now including:

• Proficiency in Generative AI (GenAI)
• Understanding of Large Language Models (LLMs)
• Application of Machine Learning (ML) in fraud detection and transaction monitoring

These technological advancements require:

• Human oversight
• Model risk management
• Strong ethical foundations

The integration of these skills is creating new roles that leverage human expertise in:

• Enhanced due diligence investigations
• AML policy development
• Cybersecurity threat hunting

Current Limitations and Proper Use of AI in AML

At present, AI should not be relied upon for tasks requiring judgment or decision-making. Instead, it serves best as:

• A rewording and summarization tool
• A technology assistant to enhance work output

It's crucial to understand that AI does not replace AML professionals. Rather, it should be viewed as a resource to augment human capabilities, providing summarizations and approximate information.

Challenges with AI: Hallucinations and Generalization

AI hallucinations remain a significant concern. Key points to remember:

• AI may combine factual and non-factual information
• It aims to provide desired responses, not necessarily accurate ones
• AI doesn't distinguish between truth and falsehood
• GenAI generalizes information, potentially leading to inaccuracies with highly specific queries

Essential Skills for the AI-Augmented AML Professional

1. Reviewing and validating AI responses and conclusions
2. Identifying mistakes, especially in compliance, investigations, and risk management
3. Understanding AI's strengths, weaknesses, and information processing methods
4. Recognizing and mitigating inherent biases in AI training
5. Adhering to a "verify before trust" approach

Getting Involved in AI within AML

To engage with the growing role of AI in AML:

1. Pursue introductory coding classes or self-paced certificate courses (including free resources)
2. Utilize reputable AI tools like ChatGPT, Copilot, and Dolly
   • Remember: While these tools are legitimate, they are still AI and require verification
   • GenAI aims to provide preferred answers, not necessarily correct ones

By embracing these technologies responsibly, AML professionals can enhance their capabilities and adapt to the evolving landscape of financial crime prevention.

How do you think GenAI will affect future AML jobs? Big, small or insignificant? Why? 

Where do you think GenAI could help in the AML space?

3 ways generative AI can help with financial crime investigations:

 

1. Pattern recognition and anomaly detection: Generative AI models can analyze vast amounts of financial transaction data to identify unusual patterns or anomalies that may indicate fraudulent activity. By learning normal transaction behaviors, the AI can flag deviations for further investigation.

2. Natural language processing of documents: AI can rapidly process and extract key information from large volumes of unstructured text like emails, chat logs, and financial documents. This can help investigators quickly sift through data to find relevant evidence and connections.

3. Predictive modeling of criminal networks: By analyzing historical data on known financial crimes, generative AI can create models to predict potential criminal networks or forecast likely future criminal activities. This allows investigators to take a more proactive approach.

(A Couple) Technology Mistakes in FinCrime and how to avoid them

Over the past decade, technology in financial crime prevention has evolved significantly. When properly utilized, it serves as a powerful ally for financial institutions in their battle against fraudsters and in safeguarding customer assets. However, if misused, this same technology can become a destructive force, enabling theft, embezzlement, and devastating personal lives.

Modern innovations like sophisticated behavioral analysis, AI, machine learning, and robotics offer valuable tools for this purpose. When implemented effectively, these technologies can enhance the detection of suspicious activities, minimize false alarms, and accelerate response times.

The trick is understanding how to use this technology, when and where. It's onerous, it's expensive and as transactional volumes increase, so do the potentials for mistakes.

You Can't See Me: Illicit actors establish numerous fraudulent accounts through shell companies to facilitate the laundering of their unlawfully acquired funds. The proliferation of digital banking has intensified this issue, allowing for the rapid global transfer of immense amounts of money in near real-time.

Developing a secure technological infrastructure for the transparent and trackable sharing of customer data, disseminated via digital pathways under the control of sanctioned users, offers a solution to this challenge. This system, akin to a digital passport, can foster trust among participants.

You can have your privacy, but security too? How do global governments and regulatory bodies balance preserving their citizens' privacy with implementing sufficient oversight and transparency to safeguard against criminal activities? What's the optimal approach to simultaneously uphold citizens' rights and ensure their protection? There needs to be an innovative structure of working to combat these kinds of illegal activities via a collective, collaborative effort by both the public and private sector.

Enhancing protocols for financial institutions to verify suspicious activities would be a crucial first step. Ultimately, this issue revolves around trust: individuals must have faith in their governments and banks regarding the appropriate use of their information, while banks and regulators need increased certainty about account holders' identities.

Missing evidence is not the same as missed evidence or evidence that is lost.

  

Missing evidence is not the same as missed evidence or evidence that is lost. When I speak of missed evidence it relates to evidence that could have been found had the right avenues been followed down.

One notable case is the O.J. Simpson murder trial from 1995. There was delayed collection of evidence wherein police waited hours before thoroughly searching the crime scene, potentially allowing evidence to be contaminated or lost. Among other errors there was overlooked evidence: A bloody fingerprint on a gate near the crime scene was not properly documented or analyzed. These investigative errors were exploited by Simpson's defense team to cast doubt on the prosecution's case, potentially contributing to his acquittal in the criminal trial.

This could have been avoided by:

• Following proper evidence collection procedures and handling,
• Following proper documentation procedures in criminal investigations

Instead, the playing field was leveled through time and age.

Thankfully, lessons were learned and have significantly influenced modern forensic science and criminal investigation procedures, leading to more rigorous standards and practices in evidence handling across the legal system.

Blueprint to avoid the 5 biggest mistakes in FinCrimes investigations

I love financial crimes and digital investigations. My aim is to guide other FinCrime Investigators to be the best they can be. I hold certifications in AML, Financial Crimes & Digital Investigations. I'm introducing a new and completely FREE min-course on improving your Financial Crimes Investigations.  You can see more here:  Better Financial Crimes Investigations

 

Norton Lifelock Scam

 

This genius is just waiting for the next victim to call so they can remote into your computer. They'd just love to have your banking information, your credit card information, and all of your contacts would be nice!

Delete these. Save yourself future heartache and save your contacts the bother.

5 scams spreading online that can cost you thousands

 

Kim KomandoSpecial to USA TODAY

We know that scams are rampant, but so many Americans still fall for them. Think you’re immune? Take Google’s scam spotter quiz and see if you can pass it.

You may have noticed that the number of robocalls slowed down when the pandemic hit. As call centers reopen around the world, robocalls are increasing. Tap or click here for proven ways to stop annoying robocalls for good.

Scammers have gotten more sinister. Here are five scams that are spreading now:

Get $1,000 in COVID-19 relief

Many Facebook users have reported getting messages offering “COVID-19 relief grants." The scammers pose as familiar contacts or relatives, offering the grants worth upwards of $1,000. If you take the bait, the scammers demand an upfront processing fee to send you the money.

Once you send the fee, the conversation either ends with the money you sent gone for good or the scammer requests even more fees. You may even get offers of additional grants. Scammers typically use either hacked or duplicated accounts created with stolen images and personal details.

Clicking the wrong links can send you straight to a malware mess. Here are the warning signs your phone or tablet has a virus.

If you are looking for COVID-19-related programs, go straight to the source or the official USA.gov page.

If you’re a victim of a COVID-19 scam, here’s how to report it:

• Report the scam post and fake profile on Facebook.
• Call the National Center for Disaster Fraud hotline at 866-720-5721 or email disaster@leo.gov.  
• If you have lost money online, submit your complaint through the Internet Crime Complaint Center (IC3).

The puppy is so dang cute

Many people want a pandemic puppy or kitten to ease the stress of current events. Scammers pose as individuals or breeders and post photos of the animals on social media, Craigslist, or dedicated pet websites.

You spot your new fur baby and reach out. The scammers ask questions via email or chat to pre-qualify you as an excellent potential adoptive family. The interview's real reason is the scammers want you to get emotionally vested and attached to the animal. 

Sorry, the animals don’t exist. The scammers use photos they stole online. Do a reverse image search to spot the fakes.

When you want a new pet, visit Petfinder and The Shelter Pet Project.

If you’re a victim of a pet scam, here’s how to report it:

• Petscams only investigates scams that are using their own website.
• You can report the scam posts and profiles on Facebook. There’s also a dedicated Puppy Scams page.
• You can file a complaint with the Federal Trade Commission.

If you have lost money online in a pet scam, submit your complaint through the Internet Crime Complaint Center (IC3).

There’s porn in your cloud account

Say you get a phone call from Apple’s Special Investigations Unit. The bogus official-sounding investigator tells you that child pornography has been found in your online cloud account. He explains in great detail that someone likely planted child pornography on your computer and it’s being backed up to the cloud. Their forensic team needs complete access to your computer to find the child pornography and remove it.

Lucky you, Apple’s Special Investigations Unit accepts Amazon gift cards for payment. Just send them the gift card numbers and activation details.

A recent caller to my national radio show fell for this scam and sent the scammers over $90,000! Multiple red flags spell scam. Namely, Apple (or any other tech company) will not call you if there is child pornography on your computer. Law enforcement and the feds will knock on your door with warrants in hand.

Furthermore, no tech company will accept retail store gift cards for payment. When you get an unsolicited phone call from a big tech company that needs complete remote access to your computer, hang up.

If you are a victim of a telephone scam, here’s how to report it:

• File a complaint with the Federal Trade Commission.
• Perhaps you fell for this scam because the caller ID was spoofed. Report this online with the Federal Communications Commission.
• Every state has a consumer protection office that can assist, too.

I don’t remember ordering this

Have you gotten a mysterious package in the mail containing jewelry, kitchen utensils, or small toys? If so, you’re the victim of a bizarre “brushing scam” that involves packages originating from China. Sketchy online sellers try to bolster the number of positive reviews on Amazon and other shopping sites.

It's actually a lot of work. Online sellers in China find addresses in the United States, where they can ship inexpensive packages. Afterward, they create a fake account on the shopping site using the address where they shipped the product. That address is only being used to let them create fake reviews.

Over the past few months, there was a wave of seeds received from China. Amazon has since banned the sale of all foreign plants and seeds on its site.

If you are a victim of a brushing scam, here’s what you need to do:

• File a complaint on Amazon as a security issue.
• For good measure, change your password at the shopping site.

By the way, according to the Federal Trade Commission, you are allowed to keep any products you receive as part of a brushing scam.

How can you tell good products from the junk online with fake reviews floating around? Tap or click for some online shopping know-how.

The CEO emailed me

With so much information available online on sites from Crunchbase to LinkedIn, along with state corporation records, it’s fairly easy to know who’s who in a company. These searches open the door to a breed of sneaky phishing email called BEC, short for “Business Email Compromise.”

You get an email that appears to be from your manager, co-worker, department head (HR is a favorite), or even the CEO. The return address looks legitimate and says it’s from @yourcompanyname.

The stories vary. Maybe you need to pay an invoice, check a budget, or complete a form. Don’t dilly dally. You have to do it now!

There is a file attached to the email. Open the attachment and you’ve got a keylogger on your system or worse. Recently, a BEC was spreading that contained a link that redirected you to a Microsoft SharePoint page for you to download the file. This roundabout method prevents email defenses from marking the message and attachment as spam.

If you just opened an attachment to a BEC, here’s what you need to do:

• Notify your company’s IT department and manager.
• Run a complete system scan for any viruses and malware. Here are some free online tools.
• Change your passwords to everything. Yes, it’s a total pain. These tips can make it easier.

If you or your company lost money in a BEC, here’s what you need to do:

• Notify your company’s IT department and your manager.
• Someone should notify your financial institution and have them contact the financial institution where you sent the money.
• Report the crime to your local FBI field office.

Since you lost money online, submit your complaint through the Internet Crime Complaint Center (IC3).

Those are just five of the many scams circulating online. Trust me, by the time you've finished reading this, there will be more. Use your best judgment and remember, there's always someone out there trying to fool you out of your money.