With financial-crime-detecting AI systems growing in profile, financial institutions and other regulated entities are likely to face pressure — both internal and external — to deploy more advanced technology to help thwart potential criminal activity.
Bracewell’s Seth DuCharme told The Wall Street Journal that enforcers are often willing to give credit to businesses that at least made an effort, even if a compliance failure ultimately occurs. But the details of how a specific product functions are key in how enforcers might react, he added.
“If [it’s] a cheap off-the-shelf product that is never updated, rarely tested and unknown in the industry, it’s going to work against you,” DuCharme said. “Like anything else, that has to be pressure tested and evaluated and re-evaluated.”
DuCharme said that given the more vigorous enforcement of the current administration, the push for better compliance has extended to even midsize businesses — in all industries — which have turned to smarter tools like those used by financial institutions as they try to stay on top of evolving sanctions, bribery and due-diligence concerns.
“It’s straining companies’ ability to ‘issue-spot’ across all those different silos with confidence,” he said. “Naturally, they say ‘Well, geez, can’t we get some software to help us do this?’”