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The financial crime ecosystem is rapidly evolving, and traditional prevention methodologies are falling short in protecting consumers against increasingly frequent and sophisticated financial crimes. Processes like Know Your Customer (KYC) remain manual and often ineffective, while cybercrime prevention tactics remain siloed and relatively static and unable to fully address the security challenges of an increasingly digital, mobile banking experience. Finding ways to keep up with this evolution is imperative, especially in light of stricter regulations and declining consumer trust.

Let’s take a look at how Microsoft is collaborating with organizations around the world to enable institutions to address these issues through digital transformation and the infusion of AI.

Outdated KYC methodologies are inefficient and ineffective

Anti-money laundering (AML) processes like KYC are a critical function to assess and monitor customer risk, but manual KYC processes are time-consuming, costly, and inefficient. New compliance requirements, a lack of qualified compliance professionals, and penalties in case of non-compliance make the process even more cumbersome. One particular challenge is the high rate of false positives generated by antiquated AML Transactions Monitoring Systems (TMS). The predominate TMS technology relies on what are essentially structured queries that aren’t precise and generates false positive alerts in the range of 95% to 98%. Since banks are required to investigate and report all instances of suspected money laundering to the Financial Crimes Enforcement Network (FinCEN), investigating false positives becomes costly very quickly. In fact, large banks spend up to $500 million each year on KYC compliance operations alone. Instead of relying on structured queries, new AML technology utilizes artificial intelligence to provide a more focused and contextual approach and reduce the rate of false positives.

The EY Financial Crime Compliance Platform powered by Microsoft Azure and the Microsoft AI Platform helps banks reduce the operational costs associated with KYC management and improve compliance processes. EY’s deep expertise in financial crime risk management enables banks to develop an enterprise-grade, future-ready compliance strategy that leverages innovative technology to automate processes and drive operational efficiency.

Combatting fraud and cybercrime requires an updated approach

As consumers demand a digital, mobile banking experience, new security challenges are emerging too quickly for traditional cybersecurity approaches to keep pace. Most cybersecurity techniques employed today are point-in-time solutions. However, a new wave of fraudulent schemes bypass login authentication and endpoint security altogether. In an attempt to plug existing security gaps, banks are layering additional security solutions on top of customer facing systems which generally harms the customer experience and provides only minimal improvement to security.

BioCatch Behavioral Biometrics, an alternative cloud-based solution, develops behavioral biometric profiles of online users to recognize a wide range of human and non-human cybersecurity threats. Instead of relying on point-in-time detection technology, BioCatch utilizes these biometric profiles to continuously verify the identity of the user throughout a session – not just at the initial login. Implementing this pioneering technology helps financial institutions stay ahead of cyberthreats while reducing friction in the user experience.

Connect with Microsoft at SIBOS 2018

These are just a few examples of how Microsoft is working with organizations around the world to deliver improved financial crime prevention solutions. To learn more about what Microsoft is doing to help financial institutions overcome the challenges of today’s financial crime ecosystem, join us at SIBOS 2018.

Author Bio: André Burrell is the Banking & Capital Markets Strategy Leader on the Worldwide Industry team at Microsoft. He began his career at the Federal Reserve Bank of New York as an attorney on enforcement actions related to Anti-Money Laundering (AML) and other compliance lapses. André leveraged his extensive experience in banking compliance and risk management at Israel Discount Bank of New York as an Executive Vice President and Chief Compliance Officer and at Deloitte Financial Advisory Services where he was a Senior Manager and led several large-scale projects at domestic and international banks addressing both AML and OFAC violations and remediation efforts. Most recently, André served as a panelist at the ACAMS 17th Annual AML & Financial Crime Conference in Las Vegas, where he discussed How Knowing Your Data is the new KYC; and how AI/ML can improve AML and Transaction Monitoring.