There's a talent shortage when it comes to compliance expertise, and that's a headache for banks and wealth managers handling rising regulatory challenges. As a result, technology, including forms of AI, is going to fill some of that gap.

Banks and other financial institutions will increasingly need to use tech – including machine learning – to help square the circle of rising regulatory demands over areas such as anti-money laundering controls, and a lack of qualified compliance professionals, Fenergo argues.

The Dublin-headquartered provider of digital solutions for know your customer (KYC), transaction monitoring and client lifecycle management (CLM) recently announced that Caribbean-based PROVEN Bank is deploying its transaction monitoring solution to streamline AML compliance processes.

In this case, the Cayman Islands were taken off the Financial Action Task Force’s AML grey list and subsequently the EU’s black list earlier this year. 

There is a talent shortage in the financial sector when it comes to compliance expertise, Rory Doyle, head of financial crime policy at Fenergo, told this publication. 

“Our research shows there is a dearth of qualified AML professionals able to carry out this work. The workload has gone up…the number of professionals available has gone down,” Doyle said. 

“That is why we see machine learning and generative-AI as an assistant to teams [in compliance] helping them to cope,” Doyle said. 

AI can help handle “false positives” – i.e. a security system mistakenly identifying a benign action or event as a threat or risk. This could be, for example, an innocent person being bracketed in the same category as a convicted or suspected bad actor with the same name. 

AI-driven systems can help cut the amount of time taken to sift through false positives so that legitimate potential/actual clients aren’t inconvenienced, Doyle said. 

“What Fenergo brings is the ability to quickly dismiss false positives so that accounts can be managed in a timely manner,” Doyle added. 

As previously reported, PROVEN Bank’s rollout of Fenergo’s tech will begin in the bank’s Cayman Islands location before expanding to its St Lucia offices and its affiliated company (PROVEN Wealth) in Jamaica.

Separately, Fenergo reported that the total size of penalties imposed on firms for breaches of AML and other regulations rose in the first six months of 2024 from the same period a year earlier.