Sumitomo Mitsui to use AI for AML monitoring of transactions

Maria Nikolova

The partnership between SMFG and SAS will enable Sumitomo Mitsui Banking Corporation to use AI when detecting and reporting transactions that may be in breach of AML regulations.

Artificial intelligence (AI) solutions continue to conquer new business areas, with Japanese companies being at the front of the adoption of this novel technologies. Sumitomo Mitsui Financial Group, Inc. (TYO:8316) and SAS Institute Japan Ltd. today announced a partnership that will see AI being used in the AML compliance department of Sumitomo Mitsui Banking Corporation.

AI will be used to detect and report suspicious transactions with regard to anti-money laundering regulations. When looking for suspicious transactions, SMBC will exclude false alarms from the total of alerts generated from the AML system, and will then select the alerts to be reported to the authorities. Without an AI solution, the task was challenging mainly due to the time needed by investigators to complete this process. The AML transaction monitoring infrastructure that is utilizing AI is set to improve alert accuracy. The companies also aim to present the evidence for the generation of each alert.

Another reason for the use of an AI solution in the AML compliance operations is that Japanese and overseas financial regulations are becoming stricter, with financial institutions facing increased compliance costs, partially due to securing human resources experienced in financial crime countermeasures.

This is not the first time that Sumitomo Mitsui adopts an AI solution. In May this year, SMBC Nikko Securities, a subsidiary of Sumitomo Mitsui Financial Group, unveiled a partnership with NTT Communications Corporation to jointly develop an automated chat service using AI. The service, deployed at SMBC Nikko Securities’ Contact Center, aims to enhance its LINE-based enquiry service. AI Chatbot is capable of understanding customer input on LINE Talk and then automatically and rapidly provide the most appropriate response.

In February 2017, Japan Exchange Regulation (JPX-R) and Tokyo Stock Exchange, Inc. (TSE) announced they are working on applying AI to market surveillance operations by using technologies developed by NEC Corp (TYO:6701) and Hitachi, Ltd. (TYO:6501).

NEC’s RAPID machine learning and Hitachi’s Hitachi AI Technology/H were used in preliminary investigations. The tests showed that AI solutions were very accurate in detecting the possibility of unfair trading.

Read this next

Executive Moves

CMC Markets taps Finalto’s Julia Free to head UK compliance

CMC Markets PLC (LSE:CMCX) has onboarded Julia Free as its newest head of UK compliance as part of a broader organizational reshuffling at the UK’s biggest spread better.

Digital Assets

Ankr successfully patches hack, will reimburse victims and take actions to prevent further attacks

DeFi protocol Ankr plans to reimburse its affected users after a hacker managed to exploit a bug in its code that allowed for unlimited minting of its liquid staking token.

Industry News

ASIC cancels/suspends AFS license of AFSL Group and Quantum Funds Management

ASIC canceled the AFS license of AFSL Group because it failed to lodge statements and audit reports and it did not maintain AFCA membership. The Australian regulator suspended Quantum because it does not have the required professional indemnity insurance coverage.

Executive Moves

BidX Markets hires Shaun French as Research Analyst – Multi Asset

“We believe with his background in the Financial Markets and being based in Dubai, he will be able to provide our clients with access to outstanding research, while also being in a great location to help support our international clients base which is growing at a rapid pace’’.

Institutional FX

Nasdaq migrates US options exchange to AWS with +10% performance in round-trip latency

Nasdaq has announced the successful migration of the core trading system of Nasdaq MRX – one of its six U.S. options exchanges – to Amazon Web Services (AWS).

Institutional FX

TraditionData launches oil swaps pricing data at a critical time in OTC oil traded markets

TraditionDATA has announced the release of a new proprietary Oil Swap Model (OSM) which brings further visibility into illiquid and opaque oil markets.

Technology

TNS connects to Tel Aviv Stock Exchange (TASE) as market data vendor

“This latest exchange connection allows TNS to provide access to approved recipients, including exchange members and market data vendors. This project includes market data for TASE’s equities and increases the number of market data feeds we now offer globally.”

Executive Moves

Cowen Digital taps ex-Blockchain.com Taylor S. Cable to lead Europe and Asia operation

“Cowen Digital is a pioneer in delivering institutional grade access to the digital asset ecosystem and I am very excited to join the team at this pivotal time to grow our presence in Europe and Asia.”

Industry News

ASIC sues American Express Australia for lack of TMD on credit cards

“ASIC has now taken multiple actions under the design and distribution regime, including issuing over 20 interim stop orders. This regime turned a new page in the regulation of financial products in Australia and is intended to deliver better outcomes for consumers. It is a priority for ASIC to maximize these increased protections and see the long-term benefits of the DDO regime realized.”

<