The Benefits of Using Trading AI for KYC and AML

Artificial Intelligence is shaking up the business world. 72% of business owners feel that Artificial Intelligence is going to play an important part in the future of business. Trading AI is going to completely re-think the way we approach investment.

AI is particularly adept at repetitive, ongoing tasks. Investment involves a fair bit of repetition and constant analysis. Business executives are hoping to alleviate mindless tasks via Artificial Intelligence. 82% of business executives are hoping AI will completely eliminate paperwork. 79% of business owners think AI will make scheduling obsolete, and 78% believe artificial intelligence will eliminate the need for timesheets.

What role will trading AI play in Knowing Your Client (KYC) and anti-money laundering (AML)? What are some of the implications of these exciting, disruptive technologies?

Here’s what you need to know about trading AI, KYC, and AML.

The Current State Of Trading AI For Business

Artificial Intelligence has gone from Science Fiction to Science Fact. AI is already used in a variety of ways, both surprising and commonplace. While far from the omniscient AI overlord of 2001’s H.A.L., we’re getting closer all the time. From chatbots to virtual assistants, AI is already a part of our lives in many ways.

5 Things To Know About AI For Business

1. Not all AI is created equal. Not everybody is developing fully sentient, spiritual machines. Many are focusing on “weak AI.” Weak AI is a branch of Machine Learning where software performs specific tasks which normally require human attention. Speech recognition, visual perception, translating languages, and decision-making are some examples.
2. The Future For AI Is Bright. AI Startups have been raising $2 billion in venture capital, annually. That number is likely to continue to rise.
3. Everybody does AI differently. Investment bankers might use AI to combat fraud. Business owners might use AI chatbots to improve CMR. Every industry will use Artificial Intelligence in their own way.
4. AI is useful for getting a behind-the-scenes glimpse. AI is already being implemented for capital modeling scenarios. It’s also useful for detecting natural language patterns, which can help detect fraud.
5. 66% of professionals working in the financial industry feel they can’t invest in AI due to budget restrictions or limited resources.

What Are Trading AI?

Research into AI and investment have been going strong since at least the 1980s. AI Researchers in the ’80s were primarily focused on Fuzzy Logic and Expert Systems, however.

Today’s AI researchers are putting more of their energy and resources into neural networks and machine learning, for identifying predictors that indicate profitability. These can be used to create profitable, fully-automated investment models.

How Is Trading AI Being Used In Today’s Financial Markets?

Artificial Intelligence is already being used for fully-automated hedge fund investment. Ben Goertzel founded Aidyia, the first investment software requiring zero human intervention. If we all die it would keep trading,” according to Goertzel.

Aidiya’s AI hedge fund calls upon several strains of artificial intelligence and machine learning, from genetic evolution to probabilistic logic. Each AI engine evaluates market prices, volume to macroeconomic data and documents from corporate accounting. Each AI engine then “votes” on the investments for the day, and a democratic course is agreed upon.

Artificial Intelligence is also used to constantly evaluate, update, and improve investments. Currently, 9% of investment firms are relying upon computer-generated models, accounting for about $197 billion, annually. These models are manually updated, however, remaining relatively static.

Trading AI offers a distinct advantage over these static models, especially in regards to KYC and AML.

The Role Of AI In KYC And AML

The current state of KYC-AML investigation requires manual investigation, especially at the alert investigation stage. This can be costly, prone to errors, and time-consuming.

In light of the nearly 270 million potentially-fraudulent Facebook accounts, customer verification and customer due diligence (CDD) is only likely to increase, as will the need for KYC along with it.

AML concerns are also on the rise, with numerous financial institutions around the world garnering hundreds-of-thousands of dollars in fines. United Overseas’ Bank was fined $900,000 for breaches of AML regulations. Deutsche Bank was fined $204 million for the same. The #1 rule for businesses is to stay financially competitive. Soon, financial institutions will have no choice but to implement AI for KYC-AML.

How AI Improves KYC-AML

Evaluates Links

AI-based link analysis explores associations between large numbers of different kinds of objects. AI can comprehend complex webs of evidence and draw conclusions in a way that very few humans are capable of.

Pattern Recognition

Money launderers tend to follow certain steps to hide their criminal activities. Most of the major world banks are already switching to AI investigation that is more able to pick up on complex patterns that a human might miss.

Unstructured Data Analysis

AI is learning to “read,” using Natural Language Processing (NLP), and “understand” segments of a document based on those insights. AI is able to assess written content, using these rules, and respond accordingly.

Automate Workflow

AI for KYC-AML can also be used to automatically generate documents, reports, financial audits, and generate notifications. These documents provide links to specific data and are fully linkable. This will be invaluable, as the need to “follow the money” increases, from political investors or lobbyists to AML concerns.

Why Is KYC-AML Important For Food And Raw Materials Trading?

Trillions of dollars in food and raw materials futures are already hitting the blockchain. This only stands to increase. This only stands to increase. The decentralization of future trading is going to have a wide impact on the futures market. It’s going to be simpler, more cost-efficient, and fair.

As cybersecurity and CDD continue to be hot-button subjects, as we segue our way into a new virtual, KYC and AML will become increasingly important. Get ahead of the curve and start finding out what AI can do for your investments.

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