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How generative AI can reshape the financial crime landscape

Financial crime is estimated to cost $1.4-3.5 trillion worldwide. With sophisticated methods deployed by criminals, government, regulators, and law enforcement often play catch-up to maintain trust in the financial system. There is an increasing need for change and innovation to tackle financial crime. Generative artificial intelligence (GenAI) has transformative capabilities for organizations, with business applications evolving rapidly. The financial industry is an early adopter of technology and is witnessing the increasing application of GenAI in fraud prevention, anti-money laundering (AML), counter terrorist and proliferation financing (CTPF), and cyber security, collectively referred to as FinCrime.

THE CASE FOR GENAI ADOPTION
Generative AI (GenAI) can boost efficiency across AML controls, allowing individuals to play a more prominent role in detecting and preventing FinCrime. Different entities are experimenting with large language models (LLMs), with results underscoring opportunities for FinCrime operations. LLMs are a type of AI algorithm that uses massively large data sets and deep learning predictive techniques to understand, summarize, and generate contextual content. GenAI is not limited to text, but can be used to extract, analyze and classify data, and augment case summaries.

GenAI can train on large real-time data sets that include both normal and anomalous transactions, and can then perform statistical analysis to determine what is normal and what is anomalous.

GenAI models can analyze behavioral data and process enormous amounts of customer transaction history to identify unusual events. Different fraud detection models can be evaluated to proactively detect emerging fraud patterns. GenAI can automatically flag a suspected fraud when deviations are found and trigger a case examination. This reduces the manual effort required to retrieve, analyze, and present case summaries for decision-making.

Think of GenAI augmenting case examiners to detect fraud as it occurs, make faster and value-making decisions to prevent fraud, and reduce human error and biases.

It is much easier to personalize fraud detection models to customer personas with GenAI. This not only allows for a personalized banking experience but also makes it harder for criminals to scale and exploit weaknesses in the system. Eventually, GenAI can generate insights to strengthen FinCrime controls. This helps banks stay ahead of the curve, detect, and prevent fraud.

Malicious fraudsters are also employing GenAI technology to launch highly personalized and specific attacks on their victims. For example, fraudsters could use GenAI to analyze publicly available information and simulate fake accounts, e-mails, and calls. As such, the technology can also increase individual and organizational vulnerability and susceptibility to fraud.

In the complex, digitally connected world, FinCrime poses systemic risks to the global economy. Business leaders can stay abreast of potential risks and respond with the power of GenAI to fight FinCrime.

TURBOCHARGED FINCRIME CAREERS
FinCrime operations are currently overly complex and manual. Detecting and preventing FinCrime is an onerous task compounded by complex policies, legacy technology, and inaccurate, voluminous and unstructured data. However, with GenAI, FinCrime roles are being elevated to the equivalent of the superhero status of saving the world in the following ways:

• Auto-detection of FinCrime will reduce manual effort.

• GenAI-generated case summaries will reduce manual effort and allow focus on investigation and decisions, solving and preventing FinCrimes.

• Automated monitoring removes stress and allows focus on decisions and actions.

• Remove the siloed view of fraud. Transactions occur across different product types, instruments, and modes. With GenAI, it’s possible to have one collaborative, informed view of customer and rogue transactions that are in deviation.

• Regulatory changes and policies can be easily applied across customers, products, and modes of banking. Less time is required for compliance reporting to regulators.

• Anxiety of human oversight gets eliminated with better insights and traceability.

• Generates high-skilled jobs based on the interpretation of insights and faster augmented learning.

• Better risk assessment, response, and efficient management.

• Greater adaptability to changing strategies of criminals and fraudsters, ensuring trust in the financial system.

GenAI can supplement risk assessments and detection. While FinCrime experts will still have to manage the output produced, they will have more tools and information to analyze the results, detect FinCrime, and safeguard against risk.

While the technology significantly enhances organizations’ capacity to respond to FinCrime, employees and leaders should train on new skills, embrace collaboration of AI with humans to turbocharge outcomes and learn to deal with ethics, fairness, privacy, and AI-related bias and concerns.

THE FUTURE OF FINCRIME AND GENAI
Fighting FinCrime was hostage to intrinsic human inefficiency, manual errors, and administrative burden. However, GenAI is empowering FinCrime fighting efforts with unprecedented speed and effectiveness. By utilizing LLM tools, professionals can seize opportunities to strengthen and expand the field.

While GenAI has considerable promise, it may take time for specific industries to adopt the technology on a large scale. Consequently, organizations should delineate ethical considerations and data protection policies to safeguard their assets while capitalizing on the technology’s power.

As FinCrime continues to evolve, business leaders must find the balance between efficiency and effectiveness, especially when dealing with risk. Organizations must be vigilant and utilize novel tools and technologies to adapt to and safeguard against the evolving digital landscape. Companies can remain competitive in the global market by seeking the advice of professionals with a deep understanding of FinCrime and AI and identifying GenAI-related opportunities and risks.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Anurag Mishra is a Financial Services Organization Technology partner of SGV & Co.

Indian stance on South China Sea row not linked to BRICS, its top envoy says

CHINA MINISTRY OF NATURAL RESOURCES

INDIA siding with the Philippines its sea dispute with China is irrelevant to the issues within the BRICS economic bloc, according to India’s top envoy in Manila.

“THE BRICS (Brazil, Russia, India, China and South Africa) has its own agenda and not every issue gets linked to other issues,” Indian Ambassador to the Philippines Shambhu S. Kumaran told BusinessWorld on the sidelines of a news briefing on Sept. 1.

He was asked if its stance on the dispute could affect the dynamics within the bloc.

“We have a very clear position on this matter (South China Sea) expressed in our joint statement on the South China Sea,” he added.

India, one of the world’s fastest-growing economies and the most populous country in the world, has expressed support for a 2016 arbitral ruling favoring the Philippines that voided China’s claim to more than 80% of the South China Sea.

At the briefing, Mr. Kumaran said India seeks to pursue naval and maritime defense cooperation with the Philippines.

He said Philippine Coast Guard Commandant Admiral Artemio M. Abu visited New Delhi on Aug. 24 to sign a maritime cooperation deal with his Indian counterpart, India Coast Guard Commandant Rakesh Pal.

“It’s very logical that large countries, fellow democracies in the Indo-Pacific such as India and the Philippines, will build a defense partnership,” he added.

BRICS recently invited six countries to join its fold — Iran, Saudi Arabia and the United Arab Emirates, the world’s biggest oil producers, as well as Egypt, Argentina and Ethiopia.

China published a new 10-dash line map on Aug. 28 that covers regions beyond its borders and claims most of the South China Sea.

The map also shows as being part of China the Indian state of Arunachal Pradesh, where Beijing fought a border war in 1962, and the Aksai Chin plateau, which links Tibet to western China.

In a statement on Aug. 31, the Indian Foreign Ministry said it had lodged a protest, saying the claims have no basis. “Such steps by the Chinese side only complicate the resolution of the boundary question,” it said.

The Philippines has also filed a protest regarding the new map, which was published by China’s Ministry of Natural Resources, Philippine Foreign Affairs Assistant Secretary Daniel R. Espiritu told a palace briefing last week.

Relations between India and China have been complicated by a border clash in 2020 that led to the deaths of at least 20 Indian soldiers.

“Without attributing to any one motivation, we obviously would like the region to have an evolution that is rules-based, that does not sidestep the interests of smaller states,” Mr. Kumaran said. “Coercion and shall we say resort to aggressive maneuvers are avoided because we all have a common stake in this region.”

The envoy said India is not ruling out joint patrols with the Philippines. He said he met with Defense Secretary Gilbert C. Teodoro, Jr. two weeks ago to discuss “the broad agenda of defense cooperation and security partnership.”

Armed Forces of the Philippines Chief General Romeo S. Brawner, Jr. last week vowed to boost the country’s military presence in the waterway amid rising tensions with China.

During his confirmation hearing on Aug. 30, he told senators the name of the game in the South China Sea is “effective presence.” “Whoever has many ships gets the advantage,” he said, noting that there were more than 400 foreign vessels in the South China Sea at any given time.

Tensions between the Philippines and China have worsened after the Chinese Coast Guard fired water cannons to block Manila’s attempt to deliver food and other supplies to a grounded ship at Second Thomas Shoal on Aug. 5.

The shoal is about 200 kilometers from the Philippine island of Palawan and more than 1,000 kilometers from China’s nearest major landmass, Hainan Island.

Since 2014, China has substantially expanded its ability to monitor and project power throughout the South China Sea by building dual civilian-military bases at its outposts in the disputed Spratly and Paracel Islands, according to the Asia Maritime Transparency Initiative.

In the 2016 ruling, a five-member United Nations-based tribunal ruled China had violated the Philippines’ sovereign rights in its exclusive economic zone by building artificial islands and failing to prevent its citizens from fishing in the zone.

China has largely ignored the ruling, calling it void. Aside from the Philippines and China, Brunei, Malaysia, Taiwan and Vietnam also have claims to parts of the waterway.

“I express my solidarity with the sentiment in the Philippines with regard to such efforts and what I would call cartographic expansionism,” Mr. Kumaran said. — John Victor D. Ordoñez

Haikui intensifies, to bring more rains in western parts of Luzon

TYPHOON Haikui, locally named Hanna, intensified on Sunday morning and was expected to continue enhancing the southwest monsoon, bringing more rains in the western parts of the main Philippine island of Luzon, according to the state weather bureau.

As of 4 p.m., the center of the typhoon was spotted 240 kilometers north-northwest of Itbayat, Batanes province packing sustained winds of 155 kilometers per hour (kph) and gusts of up to 190 kph.

It was moving west-northwestward at 20kph.

Haikui was expected to leave the Philippine area of responsibility on Sunday night or early Monday, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said.

Super Typhoon Saola (locally named Goring) earlier passed the northern Philippines and swept across southern China.

At least two people died from the combined effects of the typhoons, the local disaster agency said.

One person was hurt, and another went missing after the typhoons brought monsoon rains in Luzon and the Visayas, the National Disaster Risk Reduction Management Council said in a report. 

The typhoons affected more than 400,000 people including 21,000 who took shelter in evacuation centers, council spokesman Edgar Posadas told the ABS-CBN News Channel.

The typhoons damaged more than 500 houses and caused P130 million worth of infrastructure damage, the council said.

The government had P2.2 billion in standby funds for typhoon victims, Mr. Posadas said.

PAGASA cited possible flooding or landslides due to moderate to heavy rains from Haikui in Batanes and Babuyan Islands.

It added that there could be flooding or landslides due to moderate or heavy rains brought by the southwest monsoon in the Ilocos Region, Abra, Benguet, Zambales, Bataan and Occidental Mindoro.

The southwest monsoon could also bring moderate to heavy rains in Metro Manila, Apayao, Tarlac, Pampanga, Bulacan, Rizal, Cavite and Batangas, the rest of Luzon and Western Visayas.

The rest of the country could experience cloudy skies with isolated rainshowers or thunderstorms.

The Philippines lies along the typhoon belt in the Pacific and experiences about 20 storms each year. It also lies in the so-called Pacific Ring of Fire, a belt of volcanoes around the Pacific Ocean where most of the world’s earthquakes strike.

The country constantly experiences unavoidable losses and damage equivalent to 0.5% of its annual economic output mainly due to an increasingly unpredictable climate, according to the Finance department.

Previous typhoons this year severely affected the country’s food production, with Super Typhoon Doksuri and a southwest monsoon causing P1.94 billion worth of agriculture damage. The rice sector accounted for P950 million of the total. — Norman P. Aquino

DoTr told to show how 2024 projects will benefit consumers

THE PHILIPPINE Transportation department should clarify how its proposed transport projects for 2024 will benefit commuters, according to a House of Representatives think tank.

In a policy brief, the Congressional Policy and Budget Research Department (CPBRD) said railway projects and initiatives for active transport make up a big pie of the agency’s proposed budget for next year.

“However, it remains unclear how all of these will be integrated with each other in order to provide a seamless transport experience for commuters,” it said.

The Department of Transportation (DoTr) is seeking a P214.3-billion budget for next year, 76.5% higher than this year and the fifth-biggest budget among agencies. Transportation officials are set to defend the agency’s proposed budget on Sept. 4.

DoTr’s Rail Transport program accounts for 85% or P163.7 billion of its budget. It is more than three times higher than its appropriations for this year at P48.8 billion.

The think tank also urged DoTr to include security measures in its active transport projects, citing a 2023 Social Weather Station (SWS) poll that showed 50% of Filipinos were concerned over “unsafe streets.”

Under the 2024 National Expenditure Program, P76.3 billion is earmarked for the North-South Commuter Railway project, which will connect New Clark City in Capas, Tarlac to the city of Calamba, Laguna.

The first phase of the Metro Manila Subway project, which will have 15 stations from Valenzuela to Pasay, was allotted P68.4 billion.

The Light Rail Transit (LRT) Line 1 Cavite Extension project will get P4.7 billion, while the Philippine National Railways (PNR) South Long-Haul project was allotted P3.1 billion.

Meanwhile, the rehabilitation of the Metro Rail Transit (MRT) 3 will be given a P2.9-billion budget. MRT-3 subsidy for next year is P6.1 billion.

Meanwhile, the Active Transport Bike Share System and Safe Pathways program in metropolitan areas will get P500 million.

DoTr should clarify how its active transport projects would help cut the country’s carbon footprint, the CPBRD said, citing the government’s 2022-2040 Philippine Energy Plan. — Beatriz Marie D. Cruz

Immigration chief warns OFWs against third-country recruitment

Overseas Filipino workers are seen at the main airport in Manila in this file photo. — REUTERS

By John Victor D. Ordoñez, Reporter

THE BUREAU of Immigration (BI) warned the public on Sunday against a recruitment scheme that would transfer overseas Filipino workers (OFWs) with expired visas and employment contracts to employers in a third country without proper documents.

“While third-party recruitment is beyond the scope of the BI, we deem it necessary to share to the public stories we encounter at the airport, as we are the first to hear about this back in the Philippines, Immigration Commissioner Norman G. Tansingco said in a statement.

The immigration bureau cited a case of four Hong-Kong-based OFWs who were recruited to work in Russia after their previous employment contracts expired.

The BI warned that such a move is risky for OFWs since they open themselves to dangerous consequences. “OFWs should protect themselves from exploitation by ensuring proper documentation when they work abroad,” said Mr. Tansingco.

Toby Nebrida, who heads the Department of Migrant Workers (DMW) Strategic Communications Office, confirmed in a Viber message that the DMW Migrant Workers Protection Bureau has received reports of third-country recruitment.

Mr. Nebrida assured that the DMW was “on top of that particular concern.”

In May, the BI inked an agreement with the Commission on Filipinos Overseas to develop a streamlined government information system to combat illegal recruitment.

The immigration bureau said the system seeks to monitor and act on irregular migration incidents in the Philippines while generating accurate data on migration.

In the first two months of the year, 57 departures from the country’s international airports were tagged as possible cases of human trafficking, based on data from the BI during the period.

Groups bat for workers’ safety

A man walks past a mural in Paco, Manila, May 14. — PHILIPPINE STAR/KRIZ JOHN ROSALES

THE BIGGEST labor coalition in the country is calling for an increase in the budget for workers’ safety after a string of workplace-related incidents claimed the lives of factory and construction workers last month.

“We call upon Congress to allocate more funds dedicated to worker inspection and visitorial initiatives,” the Nagkaisa labor coalition and the Federation of Free Workers (FFW) said in a joint statement released Sunday, citing a recent factory fire in which 15 people were killed.

The groups said “strategic financial reinforcement” will ensure the cultivation of safer work environments and prevent future tragedies in the workplace.

Nagkaisa suggested that trade union leaders could serve as effective inspectors to check up on employers on labor violations and safety hazards.

“One loss of life or injury is too many and a profound tragedy,” Nagkaisa and the FFW said. “They are entirely preventable if basic occupational safety and health measures are observed.” — John Victor D. Ordoñez

 

3,000 MNLFs unite for peace

COTABATO CITY – About 3,000 officials and members of the Moro National Liberation Front (MNLF) converged in Pikit town, Cotabato last weekend to celebrate the 27th anniversary of their peace agreement with the national government and pledge support for all ongoing government-MNLF peace programs.

On Sunday, MNLF Central Committee chairman Muslimin G. Sema said Saturday’s event not only celebrates the historic agreement signed on Sept. 2, 1996 with then president Fidel V. Ramos but also the closing of ranks with the Moro Islamic Liberation Front (MILF), which now leads the Bangsamoro regional government for the last for years.

“We are together now in addressing peace and security issues, poverty and underdevelopment caused by armed conflicts,” Muslimin Sema, who is regional labor minister of the Bangsamoro region, said. — John Felix M. Unson

1.31M vying for village polls

CANDIDATES filing their certificates of candidacy for village and youth elections on Oct. 30 set up camp outside a mall in Manila midnight of Saturday to be first in line when the Commission on Elections opens. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

A DAY before the Commission on Elections (Comelec) closes all registration of candidates for the Barangay and Sangguniang Kabataan Elections (BSKE) today, it logged a total of 1.31 million aspirants for various village posts to be contested on Oct. 30.

Releasing partial figures around noon of Sunday, the Comelec said there are 92,173 aspirants for the barangay chairperson position who have filed their certificates of candidacy (COCs). For kagawad or sangguniang barangay members, 690,531 individuals have filed their COCs, while for SK chairperson, there are 85,816, and for SK members, 447,745.

The poll body said there are 672,016 seats to be contested throughout the country: 42,001 for punong barangay, 294,007 for sangguniang barangay, 42,001 for SK chairpersons, and 294,007 for SK members.

Filing of COCs wrapped up throughout the country last Saturday, except for Abra and Metro Manila where accepting COCs have been extended until 5 p.m. today. — NCB

Man gone missing in river

BAGUIO CITY — Fears mounted on Sunday that a 21-year-old man swept away by strong under currents during a picnic with four of his friends to Banao River in Bokod, Benguet last Friday had drowned.

Rescuers from the Municipal Disaster Risk and Reduction Management Council (MDRRMC) were still searching the expanse of the river for construction worker Jherby Halang of Tabangaoen, La Trinidad, Benguet.

Investigators said Mr. Halang and a 15-year-old girl were swimming around 11 a.m. when strong currents swept them to a deeper portion of the river. Mr. Halang was able to push the young girl to the riverbank, but failed to make it to safety himself, they said. — Artemio A. Dumlao

3 Luzon dams release water

AMID HEAVY rains spawned by the habagat or southwest monsoon in the past days, three dams in Luzon released water on Sunday morning, data from the Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA) showed.

The Binga Dam, located in Benguet province, opened six floodgates, while Ambuklao Dam, also in Benguet, opened five gates as they both came close to reaching their respective normal high water levels (NHWL) or spilling levels.

The water level in Ipo Dam in Norzagaray, Bulacan, reached 101.07 meters at 6 a.m. Sunday, which is slightly above its NHWL of 101 meters, so it had to open one floodgate to spill water.

Recent rains have raised the water elevation in Angat Dam to 201.45 meters as of noon Sunday, but that is still more than eight meters away from its high-water level of 210 meters. — NCB

Gilas earns a spot in Olympic qualifiers after routing China

PHILIPPINE STAR/JUN MENDOZA

GILAS Pilipinas couldn’t have picked a better parting shot in the FIBA World Cup (WC) played on Philippine soil.

A morale-boosting victory in the WC after nine years of futility, at home in front of a loud and proud “Sixth Man” and at the expense of a bitter rival in Asian hoops and, taking it deeper, territorial dispute.

And the breath of fresh air that was the 96-75 rout of China Saturday at the Smart Araneta Coliseum actually did more than provide a feel-good vibe after a string of letdowns since posting an 81-79 win over Senegal back in 2014 edition.

The ego-boosting 21-point triumph, in the end, proved enough to give Gilas a second crack at the Paris Olympics via the FIBA Olympic Qualifying Tournaments (OQTs).

When the smoke of battle in the Classification Phase cleared, the Philippines wound up second in Group M with 1-4 behind South Sudan’s 3-2 and 24th overall in the 32-team field. This was enough to earn them an invite to the OQT early next year as the “13th best team not qualified yet.”

Co-host Japan (3-2) clinched a direct entry to Paris as the best Asian team of the WC, joining top African side South Sudan, No. 1 Oceania team Australia (2-2 at presstime) and host France.

In danger of repeating the infamy of the 0-5 outing in the 2019 WC, Jordan Clarkson and Co. stepped up to the plate and made it an explosive last hurrah.

“For sure, we didn’t want our hosting to end without gifting the Filipino people with a victory,” said coach Chot Reyes, referring to the 11,080-strong crowd who braved the heavy rains and strong winds to support the team despite previous heartbreakers in the first round against the Dominican Republic, Angola and Italy and the classification opening game versus South Sudan.

“Look at them, it’s stormy outside. We’re just basically playing for nothing, but they all came out. So, we just owe this to the Filipino people,” added Mr. Reyes, who later announced his intention to vacate the post in the wake of severe bashing on his person and family on social media.

Mr. Reyes said he wrote only two words on the board before the emotional battle with Team Dragon: “Dig Deep.”

“We just told the players to come out and play, do what they do best, and that is to hoop and play ball. In fact, we had no X’s and O’s on our board; we just had the words ‘Dig Deep’ on our board today. That’s what they did,” he said. — Olmin Leyba

Stephen Loman stays focused ahead of Lineker showdown

TEAM LAKAY Stephen Loman — ONEFC.COM

BAGUIO CITY — Even with his seniors leaving Team Lakay, Stephen Loman remains in high morale as he gear’s up against former world champion John Lineker in their bantamweight showdown in One Championship One Fight Night 14 on Sept. 29 in Singapore.

Mr. Loman has been in rogorous training with Team Lakay for the past months where he was anticipating a title showdown with Fabricio Andrade.

It will be no surprise if Mr. Loman hurdles Mr. Linecker, a known knock-out artist with 18 of his 36 bouts coming via stoppage while having 10 defeats.

Mr. Loman said Team Lakay has been crafting a game plan that would counter Lineker’s punching abilities.

“We have to mixed it up against Mr. Lineker. When it comes to ground game thats my advantage but we can also mix it up sa striking,” added Mr. Loman who currently holds a record of 16–2 win-loss card and is currently undefeated in his last 11 bouts since falling to Rex De Lara in 2016.

Mr. Loman will also ride high on his recent victory against another world champion, Bibiano Fernandes in his last outing that grabbed the attention of Mr. Andrade for a possible title match.

It will be a fascinating clash of styles as Mr. Loman’s technical striking and precision will be pitted against Mr. Lineker’s raw power and aggression.

Mr. Loman, a former PXC and Brave CF champion, is renowned for his pinpoint striking, powerful kicks, and a relentless pace that leaves his opponents gasping for breath while Lineker, a Brazilian bruiser is known for his exceptional knockout power and granite chin.

With ONE Championship’s bantamweight division stacked with top talent, a victory for either Loman or Lineker could catapult them into title contention as both fighters are well aware of the stakes, and the hunger to secure a title shot will undoubtedly add an extra layer of intensity to this clash. — Artemio A. Dumlao

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