HSBC has decided to use a fintech’s AI technology to help track and fight money laundering.
Utilising the software from UK-based start-up Quantexa, HSBC hopes to clean up its act. It will analyse billions of data records from internal and external sources to spot potential money laundering and help meet regulatory standards.
HSBC global risk chief operating officer Ray O’Brien said: “Following our investment in Quantexa, we are looking forward to working closely with the company to use its technologies as we become more intelligence-led in our approach to financial crime risk management.”
The global bank paid a $1.9bn (£1.4bn) fine in 2012 for helping criminals money launder in Mexico. Alongside the payout, HSBC agreed a five-year deferred prosecution agreement (DPA) with the US Department of Justice (DoJ) under which it promised to take action to correct compliance failings.
The global lender has since spent more than $1bn tightening up its compliance procedures, including participation in a $3.3 million funding round in Quantexa in March 2017. The Quantexa software was piloted in 2017.
Suman Nambiar, Head – AI Practice, Mindtree, said: “By employing AI technology, HSBC can not only effectively comply with regulations but the human workforce is also freed to work on more strategic tasks.
“Due to the complexity of financial transactions coupled with growing data sets, disparate transaction data systems, and the integration issues involved with monitoring systems, successfully tackling money laundering and complying with stringent regulations goes beyond human capabilities.
“Artificial intelligence and machine learning have a key role to play in addressing these challenges and keeping pace with the changing banking environment. This technology allows financial institutions to move beyond traditional business models to those dynamically adaptive predictive models, which enable real-time, customer-centric anomaly detection.
“If other banks are to stay ahead of the competition, then embracing the latest technological developments will be crucial.”