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Automating financial compliance with AI: A New Era in regulatory technology (RegTech)
Federal Home Loan Bank of Chicago, Lead Data Science and Analytics Developer.
Review
International Journal of Science and Research Archive, 2024, 11(01), 2646-2659.
Article DOI: 10.30574/ijsra.2024.11.1.0040
Publication history:
Received on 01 December 2023; revised on 20 January 2024; accepted on 24 January 2024
Abstract:
Integrating Artificial Intelligence (AI) into the financial sector has revolutionized regulatory compliance, enabling organizations to navigate complex regulatory landscapes with enhanced efficiency and accuracy. This paper explores the transformative role of AI in Regulatory Technology (RegTech), focusing on how machine learning, natural language processing, and predictive analytics are automating critical compliance functions.
These technologies empower financial institutions to detect fraudulent activities, monitor transactions, and identify non-compliance with unprecedented precision. By analyzing vast datasets, AI-driven tools can swiftly adapt to changing regulatory frameworks, mitigating risks and reducing operational costs. Through a comprehensive review of existing literature and case studies, this study highlights the practical applications of AI in areas such as Anti-Money Laundering (AML), sanctions compliance, and fraud detection. It further examines the challenges in deploying AI, including ethical considerations, data privacy concerns, and integrating AI systems into legacy infrastructures.
While AI offers significant advantages, its adoption introduces complexities, such as ensuring transparency, managing biases, and balancing automation and human oversight. The paper concludes by emphasizing the necessity of collaborative efforts among stakeholders to address these challenges and develop robust governance frameworks. Looking ahead, advancements in AI promise to further enhance compliance operations, but this requires a commitment to ethical practices and continuous innovation. By responsibly leveraging AI, the financial sector can achieve more effective, adaptive, and sustainable compliance strategies, ultimately fostering trust and resilience in an increasingly regulated global market.
Keywords:
Artificial Intelligence; Regulatory Compliance; RegTech; Machine Learning; Natural Language Processing; Financial Services; Fraud Detection; Predictive Analytics; Data Privacy; Ethical AI
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Copyright © 2024 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0
