Eye on Fraud: Oracle Puts AI to Work Against Laundering, While the UK Works to Stop Misdirected Checks

Payments fraud takes many forms, forcing banks and processors to adopt fresh tactics. But sometimes the technology to prevent fraud can be expensive enough to wipe out any near-term expectation of return. 

Early Monday, Oracle Corp. launched Oracle Financial Services Compliance Agent, a platform it says can leverage artificial intelligence to run “inexpensive” scenarios to test transactions for money laundering, a crime expected to exceed $5 trillion in volume this year, according to figures from the United Nations Office on Drugs and Crime and cited by Oracle.

The quick analysis offered by AI, Oracle says, can help yield “cheaper” decisions than those derived from more traditional methods. AI also allows institutions to run so-called what-if scenarios to gauge the effect of various actions open to them.

For now, Oracle is targeting the new service at financial-crime compliance officers at financial institutions. “AI and machine learning have tremendous potential to increase the effectiveness of anti-money laundering and other financial-crime detection programs to deliver higher efficiencies in the transactional modeling process,” said Jason Wynne, a global vice president at Oracle, in a statement.

Money laundering is an enormous problem for banks, according to the numbers provided by the U.N. with volumes ranging from 2% to 5% of global gross domestic product. The crime accounts for $300 billion in volume annually in the U.S. market alone, the statistics indicate.

Key to decision-making are speed and cost. Oracle says the new product allows banks to make decisions “faster and cheaper,” though it does not cite figures. The efficiency stems from the technology’s ability to evaluate multiple options at the same time, using “what-if” scenarios, according to Oracle.

Also on the fraud front, the United Kingdom’s Confirmation of Payee service has stopped 2 billion checks from being sent to the wrong person or to a fraudster, the U.K.-based payments platform PayUK announced. The service, launched in 2020, asks senders to verify that the name they enter on a payment request matches the name linked to the receiving account.

Confirmation of Payee seeks to stop the fraud in which criminals impersonate people or organizations to gull victims into sending money. More than 100 organizations have adopted the service since its launch, according to news reports over the weekend.