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.

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