Gen AI: A helping artificial hand for compliance teams

Through complex algorithms, Generative AI (GenAI) has been reshaping how we create content, including imagery, music, text, and video; greatly simplifying data processing and task performance. This technological advance not only saves time, effort, and money but is also a game-changer in enhancing operational efficiency and fostering innovation across various sectors.

However, compliance as an industry has been slow to adopt new technologies like GenAI, predominantly due to concerns over potential risks. In fact, Legal, Compliance and Privacy leaders rank rapid GenAI adoption as their top issue in the next two years, all while other, less risk-averse organisations enjoy the upside of implementing AI in their systems.

This delay means many compliance teams are not taking advantage of AI tools that could revolutionise their processes and help them save up to 200 hours annually per user. 

The new compliance GenAI era

Compliance teams face enormous pressures, especially in tightly regulated sectors like banking and fintech. Their responsibilities include identifying risks, such as sanctioned individuals and entities, updating policies to keep up with ever-evolving regulations, and handling expansive datasets. The high volume of this data makes manual reviews exhausting and susceptible to errors, which can lead to financial and reputational damage.

One way to overcome these challenges is by leveraging GenAI. For example, false positives, which are incorrect risk flags, and false negatives, which are existing risks that haven’t been flagged, are common issues caused by trying to deal with very high volumes of matches. Implementing GenAI can reduce these inaccuracies, significantly enhancing the efficiency and effectiveness of customer and counter-party screening.

In practical terms, GenAI can reinvent how compliance tasks are performed. For instance, in drafting Suspicious Activity Report (SAR) narratives, where analysts need to justify suspicions in transactions, GenAI can help automate this writing process, combining human oversight with artificial efficiency. Platforms using GenAI excel in summarising vast amounts of data— crucial for tasks like screening adverse media, where they assist in identifying potential risks linked to negative information about clients.

Overcoming fears

It's crucial now for the compliance sector to explore how they can incorporate GenAI effectively and securely without undue risks. Dispelling fears about data misuse, the high costs of initial model setups, and the ‘black-box’ nature of AI models are central to this transition. Teams are particularly cautious about sharing sensitive data and the hidden biases that AI might carry.

Yet, some strategies can counter these challenges. By choosing suitable models that ensure robust security and privacy and adjusting these models within a solid statistical framework, biases can be mitigated. However, organisations will need to turn to external expertise – whether data scientists or qualified vendors – to support them in training and correctly deploying AI tools.

The latest advancements in GenAI suggest that virtual analysts powered by this technology are achieving, and sometimes surpassing, human-level accuracy. Despite ongoing concerns about accuracy, which may slow adoption rates, the evident potential benefits suggest a bright future for compliance teams using GenAI. These technological innovations promise not only to improve speed and efficiency but also to enhance the capability of teams to respond swiftly to new risks and regulatory changes.

Embracing GenAI could significantly elevate the effectiveness of compliance operations, safeguarding organisations against potential pitfalls while maintaining trust and integrity in their industry practices. The time to integrate GenAI into compliance strategies is now, ensuring that these teams can continue to thrive in the increasingly complex global market.