AI Turns B2B Risk Management, Compliance Into Growth Engines

As the business landscape grows more digitally connected, real-time compliance is growing more important.

Citi announced Wednesday (June 12) that Emirates NBD became the first bank to use its 24/7 USD Clearing service to make cross-border payments in U.S. dollars available to their corporate and retail clients 24 hours a day, 7 days a week, 365 days a year. The move shows that embracing payments innovation while prioritizing risk management, payments security and global compliance is top of mind for businesses looking to enter new markets and unlock new growth.

As the regulatory landscapes become more complex and the volume of transactions grows, enterprises must navigate a myriad of rules and regulations to avoid hefty fines and maintain operational integrity.

Against that backdrop, artificial Intelligence has emerged as a tool to address these challenges, offering solutions that enhance efficiency, accuracy and effectiveness in compliance management.

Traditional methods of compliance management often fall short due to their reliance on manual processes and retrospective analysis. These approaches are not only time-consuming but also prone to human error and inefficiencies. This is where AI steps in, transforming compliance management from a reactive to a proactive discipline.

Read also: How Compliance Is Shaping the Future of Cross-Border Payments

AI Innovations Move Risk and Compliance Programs From Reactive to Proactive

One of the biggest advantages of AI-driven systems is their ability to continuously monitor transactions in real time, flagging suspicious activities that may indicate money laundering, fraud or other illicit activities. Machine learning algorithms analyze transaction patterns, identify anomalies and generate alerts for compliance officers to investigate further. This real-time monitoring capability ensures timely intervention, minimizing the risk of regulatory breaches.

In a world where there are over 19,000 tax jurisdictions worldwide, enterprises looking to capture growth in new markets must adhere to diverse regulations across different jurisdictions, encompassing anti-money laundering, counter-terrorist financing, sanctions screening and data protection laws. The dynamic nature of these regulations, coupled with the increased scrutiny from regulatory bodies, demands a robust and agile compliance framework.

“Everything’s going more cross-border and getting regulated, so tax compliance regulation is huge for new business models in new markets,” Sovos CEO Kevin Akeroyd told PYMNTS in an April interview.

“Compliance has traditionally been a cost center designed to avoid risk and ensure compliance,” he added. “It has not been a force for growth — but now, it’s turning that corner, and it really can be a force for growth.”

By automating the interpretation of regulatory texts, AI ensures that compliance protocols are always aligned with the latest requirements, reducing the burden on human compliance teams. Routine tasks such as data entry, transaction monitoring and report generation can be handled by AI, freeing up human resources for more complex and strategic activities.

See also: Managing Third-Party Risks Emerges as Key B2B Issue

Solving The Compliance Conundrum With AI

Performing due diligence on new and existing clients is a critical aspect of compliance. AI enhances this process by using machine learning and natural language processing to analyze vast amounts of data from various sources, such as news articles, legal documents and social media. This comprehensive analysis can provide a holistic view of clients’ risk profiles, enabling more informed decision-making.

AI’s ability to analyze large datasets and recognize patterns is helpful for compliance management. AI systems, which excel in detecting unusual patterns and behaviors in transaction data, which might indicate fraudulent activities, can detect trends that suggest a business is engaging in activities that could lead to regulatory breaches, allowing for preemptive action to be taken.

As Thredd CEO Jim McCarthy told PYMNTS in May, compliance and risk management are among payments’ “universal truths. Payments are about risk management, compliance, reconciliation… Those that do it well and do it in a way that’s compliant and secure, that’s where the focus needs to be.”

Despite the advantages, the adoption of AI in compliance is not without challenges. Concerns regarding data privacy, ethical considerations, and the need for transparency in AI decision-making processes are among the issues that organizations must navigate.

Continuous updating and training of AI models is necessary to maintain high accuracy and avoid false positives or negatives in compliance monitoring, while seamless integration of AI systems with existing compliance and payment processing infrastructure is essential for smooth operation and optimal results.

Still, as the landscape of cross-border payments and enterprise expansion continues to evolve, AI stands out as an enabler for efficient compliance management. By automating and enhancing various aspects of compliance, AI not only mitigates risks but also drives operational efficiency and cost savings for enterprises. Embracing AI in compliance may ultimately prove to be not just a technological upgrade but a strategic imperative for businesses aiming to thrive in global markets.

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