Increasing use of machine learning (ML) and artificial intelligence (AI) in the detection and prevention of financial crimes is providing financial institutions the opportunity to perform massive computations and detect patterns that were previously undetectable with rules-based analytics.
In this webinar you will learn:
How data science uses models and patterns to detect anomalies
How the responses to these can be used to prevent future suspicious transactions or false-positives
This webinar is designed for senior compliance executives who are required to have sufficient knowledge of data science to enable a more data and analytic-driven approach to fighting money laundering and other financial crimes.
About Alessa, a CaseWare RCM product:
Alessa is a financial crime detection, prevention and management solution offered by CaseWare RCM Inc. With deployments in more than 20 countries in banking, insurance, FinTech, gaming, manufacturing, retail and more, Alessa is the only platform organizations need to identify high-risk activities and stay ahead of compliance. To learn more about how Alessa can help your organization ensure compliance, detect complex fraud schemes, and prevent waste, abuse and misuse, visit us at caseware.com/alessa.
Connect with us online:
Visit the Alessa WEBSITE: https://www.caseware.com/alessa/
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Follow Alessa on TWITTER: https://twitter.com/casewarealessa
SUBSCRIBE to Alessa on YouTube: http://tiny.cc/Alessa
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Definitions
2
1. Artificial intelligence (AI), sometimes called
machine intelligence, is intelligence
demonstrated by machines, in contrast to the
natural intelligence displayed by humans and
other animals.
2. Machine learning (ML), is a field of computer
science that uses statistical techniques to give
computer systems the ability to "learn" (e.g.,
progressively improve performance on a
specific task) with data, without being explicitly
programmed.
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Today’s State Actors and Criminal Organizations are employing highly sophisticated
tradecraft techniques that:
• Mask their activities
• Defeat existing detection techniques
• Employment of Dark Web
• Continuously adapting tradecraft to defeat defense in depth
• Mapping target-victims defensive capabilities, vulnerabilities as well as partners for
least path of resistance, creation of backdoors
4
Evolution of Financial Crime
Deception Occurs at Multiple Levels
Initial Infection
And Probing
Malware Operation Exfiltration
Where AI systems are deployed
to defend against threats
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• We do not program AI to detect threats, we train it to do so!
• Designed to detect in real-time unknowns using machine learning algorithms
• These systems will learn and interact to provide expert assistance in a
fraction of the time it now takes
5
AI vs IA
Intelligence AugmentationArtificial Intelligence
AI IA
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Key aspects:
• Complex problems require a toolset of (standard) analytics techniques and tuning efforts
in collaboration between ML and business experts.
• Approach needs to be combined with expert feedback: Unsupervised learning and
supervised techniques
• The entire solution consists of much more than just the model itself.
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Our Machine Learning Approach
Exploratory
Analysis
Data Cleansing
Apply
various ML
modules
Results
Analysis
Create Ground
Truth
Create Ground
Truth
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Ground Truth
By studying all past transactions, a model is
created that learns what it has seen and is taught
that this is normal. The resulting knowledge is
referred to as the “Ground Truth.” Subsequent
transactions are then compared to this Ground
Truth and the inability to reconcile this transaction
is returned as a score. This score can have
thresholds attached to them, and using these
thresholds we can label it as an anomaly.
Due to this procedure, it is very important to have
“pure” data while training the model. Feeding it
actual anomalies will have it learn them as well,
much as a child can be desensitized by television.
Tabular data is cleaned and fed to the model.
Scores are returned and can be visualized.
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Takeaways
• No, Artificial Intelligence (AI) won’t take
over the world.
• Yes, implement AI and Machine Learning
Technology to stay ahead.
• Stop taking a reactive/defense approach
to fight financial crime.
• Take proactive/preventative approach
(go on the offense) by using AI to fight
financial crime.
Discussions of artificial intelligence (AI) have created a certain amount of unease by those who fear it will quickly evolve from being a benefit to human society to taking over. Even Stephen Hawking and Elon Musk have warned of AI’s threats. However, we’re not all operating from the same definition of the term and while the foundation is generally the same, the focus of artificial intelligence shifts depending on the entity that provides the definition.
Why Good Processes Alone Can’t Make AML Stick Anymore
Government agencies and financials services organization primarily focused on rules based transaction monitoring to fight money laundering.
These types of solutions focused only on defensive capabilities such as process improvements in regulatory compliance, risk reporting and mitigation.
Disadvantage of rule based AML systems alone generate a large number of false positive and only detect what you are looking for (what we call the “know” factor).
The importance of the variety, velocity and volume of data has forced organization to rethink their AML technology strategies and evolve from government regulation rules based solution to more sophisticated AI based solutions.
Then talk about emerging markets and on….
Why is this important you? As long as we adhering to regulatory bodies…what does it matter.
Machine data is digital information created by the activity of computers, mobile phones, embedded systems and other networked devices. Such data became more prevalent as technologies such as radio frequency identification (RFID) and telematics advanced.
Deployed AI systems of their own to intrude in you systems and customers by
Identity Theft
2. Account Takeover
Behave like normal law abiding citizens.
Impact the bottom line, brand exposure and increased fines.
Know that we know that criminal organizations are leveraging sophisticated techniques.
What do we do about?
And How? Which will be cover later.
I’m going to drilldown on more level to introduce several AI capabilities being used today by organizations such as yours.
These capabilities include:
1. Anomaly Detection – is an advanced technique used to detect behavior that don’t fit within the a normal data profile.
2. Suspicious Behavior Monitoring – focuses on what we call known labels such as fraudulent behavior.
3. Cognitive Capabilities – such as cognitive virtual assist that leverage NLP to provide compliance SME insight into changes in regulatory requirements.
4. Automation Robotic Processing – automates repetitive manual activity such as remediation and workflow process.
All of these capabilities have 2 common dimensions: ML and Data.
I will hand it off to Josip who will take about the several uses and approach.
Thank for segue
Intro myself
Intro ML, math, process
Discuss process, show model place
The solution is not just the model
Fraud is a unique problem
Solution to this, GT
Unsupervised learning
Baseball coach
Maybe a little backwards
Follows a child’s learning path
Using GT, tries to recreate the trans
Difficulty shows up as an anomaly
Transfer learning
Because the grouping is already known
Add fraud
Can now isolate specific instances
Future (is now?)
Predictive solutions
Using the two previous models
Extension
GANs
- Stop Looking in your rear view mirror.
- Look forward to get insight to prevent financial crime before they happen.