Nordic Banks Look to Machine Learning to Fill Compliance Roles: Report
18 Jun 2019

The market for anti-money laundering (AML) compliance jobs may be on the rise in Nordic countries, but don’t count on that trend continuing. Advances in technology could render many compliance roles at Nordea Bank and Danske Bank obsolete, Bloomberg reported Monday.

While Helsinki-based Nordea Bank relies on hundreds of employees to help scrutinize billions of transactions for signs of criminal activity, the system is costly and inefficient, and one the lender hopes to move away from, Mikael Bjertrup, head of the bank’s financial crime prevention unit, told the news outlet.

The bank, which currently uses machine-learning algorithms to close approximately 20 percent of its suspicious transaction alerts, is seeking to increase that total to 80 percent—a shift that would scale back the number of compliance officers needed by the institution, according to the report.

“We’ll be fewer people in the future, but our defense will be better,” Bjertrup told Bloomberg. “We won’t need as many as 1,500 employees in the future, as technology improves.”

Phillippe Vollot, the head of compliance at Danske Bank, also believes that his institution will cut back on staff as technology takes an increasingly larger role in AML compliance.

Long-predicted in a sector where “fintech” and “artificial intelligence” have become buzzwords, the advent of machine-learning solutions has drawn criticism as much as it has praise.

Critics argue that heavy reliance on AI and similar solutions could leave banks exposed to AML risks, whether from poorly set filters or other missteps. Proponents say that the technology will bolster banks’ defenses against financial crooks by identifying suspicious behavior in tandem with seasoned AML staff—a conclusion implicitly endorsed by UK and US regulators in recent years.

Once integrated with a bank’s AML controls, AI can result in “significant efficiencies in typical operational hotspots, such as customer due diligence, screening and transaction monitoring controls,” EY said in a 2018 report, which also noted a sixfold rise in annual venture capital investment in US-based AI startups since 2000.

The driver for the financial sector, however, may be something more familiar: cost.

A 2017 report by Lexis-Nexis Risk Solutions found that banks in five of Europe’s biggest financial markets spent over $85 billion annually to comply with AML regulations and rules, with staff accounting for 74 percent of those costs, Bloomberg said.

While Nordea and Danske have invested heavily on AML compliance in response to money laundering scandals, “more than 90 percent of all investigations end in perfectly good explanations,” Bjertrup told the news outlet.

Vollot, who has been given “free rein to hire” as Danske Bank responds to multiple criminal probes into alleged money laundering, believes that the additional staff and resources are a reflection of the fact that the lender doesn’t yet have the technology to better address its compliance vulnerabilities.

At some point, the “technology kicks in and you benefit from proper systems, algorithms, scenarios, case management platforms and ultimately artificial intelligence and robotic,” Vollot told Bloomberg. “And usually this is the phase where you start to reduce the number of people you need.”

Read more:

The effects of artificial intelligence on the AML landscape

Artificial Intelligence: rise of robots could trigger banking risk

HSBC to use artificial intelligence to detect money laundering

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