Posted by Brian Monroe - firstname.lastname@example.org 04/07/2021
Federal regulators to banking industry: How do you use AI to fight financial crime, train data, mold models, secure cyber, serve customers?
By Brian Monroe
April 7, 2021
The five top regulators of the country’s financial services sectors are querying the industry about the pros, cons, potential and prognostication tied to artificial intelligence, including in the areas of financial crime compliance.
The U.S. Treasury’s Office of the Comptroller of the Currency (OCC), the regulator of the country’s largest and most complex institutions, and the top oversite bodies for credit unions and consumer protection have released a request for information (RFI) to better understand how, why and why not when it comes to banks of all sizes using artificial intelligence (AI).
These operations have roughly the next two months to answer a bevy of questions tied to AI, including systems, models and automated machinations to better calibrate anti-money laundering (AML) risk, engage in deeper and more data-driven investigations, more quickly uncover frauds and counter rising cyber vulnerabilities and prevent high-profile attacks.
To read the full 23-page RFI and comment, click here.
Depending on the responses, regulators may issue more guidance on where AI can help institutions and pitfalls to avoid.
The interagency statement also gave a rare glimpse of AI apocalyptic scenarios, including disorganized data tainting conclusions, unvalidated models running amok or being “poisoned” by hackers, uncoached systems self-updating beyond human understanding and even a lack of “explainability” when it comes to engaging with examiners.
The RFI “seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; challenges in developing, adopting, and managing AI; and whether any clarification would be helpful,” according to the notice.
Regulators also want to know if there are any barriers for entry in testing the waters for AI for smaller banks and credits unions, that may not have the budgets, systems, internal expertise or clout to attract vendors to take a chance on them to upgrade technology for the greater good.
The RFI sought input on AI for a broad array of banking systems, from countercrime compliance to customer service, credit risk to automated chatbots for online banking and natural language processing for telephone transactions.
For many who follow the at-times collegial, and other times, adversarial relationship banks have with their regulators, the RFI is somewhat comical.
In surveys, public statements and in private grumblings, fincrime compliance teams have stated the main reason they have not more widely adopted AI and other regulation technology, or regtech, systems is because they feared regulatory reactions.
At issue: examiners exsanguinating for missed AML minutiae over here even while you are innovating for effectiveness over there.
See What Certified Financial Crime Specialists Are Saying
"The CFCS tests the skills necessary to fight financial crime. It's comprehensive. Passing it should be considered a mark of high achievement, distinguishing qualified experts in this growing specialty area."
KENNETH E. BARDEN
"It's a vigorous exam. Anyone passing it should have a great sense of achievement."
(CFCS, Official Superior
de Cumplimiento Cidel
Bank & Trust Inc. Nueva York)
"The exam tests one's ability to apply concepts in practical scenarios. Passing it can be a great asset for professionals in the converging disciplines of financial crime."
(CFCS, Royal Band of
"The Exam is far-reaching. I love that the questions are scenario based. I recommend it to anyone in the financial crime detection and prevention profession."
(CFCS, CAMS Lead Compliance
Trainer, FINRA, Member Regulation
Training, Washington, DC)
"This certification comes at a very ripe time. Professionals can no longer get away with having siloed knowledge. Compliance is all-encompassing and enterprise-driven."
CFCS, CAMS, CFE, CSAR
Director, Global Risk
& Investigation Practice
FTI Consulting, Los Angeles