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Oscilar Unveils AI-Powered AML Risk Platform: Transforming Compliance for BaaS

Saurabh Bajaj

Apr 7, 2024

The Banking-as-a-Service (BaaS) model has enabled fintechs to offer innovative financial services by leveraging established banking infrastructure. However, this growth has attracted unprecedented regulatory scrutiny, especially in Anti-Money Laundering (AML) compliance. With global money laundering estimated at $2 trillion annually by the UN, sponsor banks and their fintech partners face mounting pressure to combat financial crime while continuing to foster innovation.

The BaaS model has empowered fintechs to innovate, but this growth comes with heightened compliance challenges. Sponsor banks are faced with the difficult task of overseeing the AML risks of their fintech partners, which can vary greatly depending on different products, services, customers, and geographies. Non-compliance can result in severe legal repercussions, monetary penalties, and reputational damage. Evidenced by sponsor banks facing a surge in regulatory actions and consent orders, many of which relate to failure to navigate stringent AML and related regulations.

This evolving landscape necessitates next-generation AML solutions that balance fintech innovation with robust compliance safeguards. Oscilar's AI-Powered AML Risk Platform is a groundbreaking solution designed to align fintech agility with traditional banking's regulatory rigor. By leveraging a completely integrated compliance stack and cutting-edge AI technology, Oscilar redefines AML compliance, enabling sponsor banks and fintechs to combat financial crime effectively together, while continuing to spearhead innovation.

The Escalating Compliance Challenges in BaaS

The rapid growth of the BaaS model has raised regulatory concerns over potential systemic risks and compliance vulnerabilities. As the fintech ecosystem expands, each new partnership adds to the scrutiny, necessitating diligent risk management by sponsor banks to mitigate regulatory penalties for failing to properly oversee their fintech partners.

Factors Fueling Regulatory Scrutiny

  1. Exponential Growth: The BaaS market's explosive growth has heightened concerns about the risks associated with these complex partnerships, prompting regulators to monitor for potential instability.

  2. Inherent Fintech Compliance Risks: The fintech model presents inherent compliance challenges for sponsor banks, who must ensure comprehensive oversight of intermediary providers across separate organizations.

  3. Banking Failures: Recent bank collapses have intensified regulatory focus on BaaS compliance, driving demands for robust fraud prevention measures and tighter AML/KYC regulations.

  4. High-Profile Fintech Failures: The collapse of prominent fintechs associated with banks has exposed systemic risks, escalated concerns of consumer harm and put a spotlight on inadequate bank oversight, spurring regulators to seek preventive measures.

  5. Evolving Compliance Landscape: Sponsor banks grapple with managing compliance risks across diverse fintech partnerships, navigating challenges like account opening vulnerabilities, lending practice opacities, data security gaps, and varying AML standards across jurisdictions.

To strike a balance between innovation and sustainability, thorough risk-based compliance programs are essential. Sponsor banks must actively oversee their fintech partnerships to mitigate risks and avoid regulatory penalties.

The Fragmentation Dilemma

  • Siloed Compliance Tools & Data: Reliance on multiple technology, fraud detection, and compliance providers leads to fragmented systems, where critical data is siloed across platforms, hindering automation and operational efficiency.

  • Visibility Gaps: This fragmentation creates substantial visibility gaps for banks, impeding their ability to maintain a comprehensive view of their risk posture across the entire fintech portfolio, hampering effective oversight and risk management.

Limitations of Current AML Solutions

Despite the availability of AML solutions, sponsor banks continue to face significant challenges:

  • Data Trust Barriers: Lack of robust data integrity and governance from many vendors impedes bank-fintech collaboration, presenting significant data security and compliance risks.

  • Restricted Visibility: Limited visibility into fintech partners' activities hinders risk management and timely issue resolution, requiring substantial resources, tools, and expertise for continuous oversight.

  • Integration Complexities: Building a modern risk-based compliance program necessitates integrating multiple systems, including core banking platforms, batch AML monitoring, real-time IDV, EDD, investigations, evidence collection, reporting, governance, and auditing. Compliance teams are overwhelmed by alert management rather than proactive risk mitigation.

  • Rigid Solutions: One-size-fits-all compliance solutions fail to address the complex fintech landscape. Banks need flexible tools that enable detection of various risk patterns and empower self-service modeling, investigation, and reporting capabilities.

  • Insufficient Automation: Sponsor banks require consolidated data systems that provide immediate insights for proactive risk management. Despite process automation, AML teams still struggle to comprehend customer risks, expected behavior, case origins, and create detailed narratives for SAR filings.

Current solutions primarily address issues reactively rather than proactively, often resulting in complex and cumbersome compliance frameworks. Additionally, the reliance on manual processes introduces further risks of errors and delays.

Is There a Solution? Building a Foundational Compliance Stack, Not Just Duct Taping Tools

Oscilar has developed an AI-Powered AML Risk Platform to tackle the compliance and fraud detection challenges faced by the financial industry. This innovative platform consolidates various data sources and employs AML semantics to offer a holistic view of customer interactions and risk monitoring throughout their financial engagements. By combining traditional AML scenarios with generative AI and machine learning, Oscilar enhances real-time risk detection and streamlines the entire investigation process. The platform harmonizes regulatory compliance, advanced technology, and deep semantic understanding, enabling financial institutions to navigate the intricacies of AML compliance with unmatched accuracy and insight.

Oscilar's AI-Powered AML Risk platform is designed to bridge the gaps in current compliance frameworks. It equips both fintechs and sponsor banks with:

  1. AMLOps Visibility and Control: Unified Platform for Comprehensive Compliance Oversight

    Oscilar's Mission Control Dashboard centralizes AML data, providing a comprehensive view of compliance risks and enabling holistic management of financial crime programs. Key features include:

    • Unified AML Typology Monitoring: Track AML typologies across various fintechs or products in one consolidated view.

    • Fintech Program Health Monitoring: Assess the health and effectiveness of fintech programs, ensuring compliance and operational efficiency.

      Rule Performance and AML Trend Analysis: Gain insights into rule effectiveness and emerging AML trends for proactive adjustments and strategy optimization.

Oscilar's AI-Driven Case Management offers a 360-degree view of customer risk, empowering compliance teams with:

  • Comprehensive Case Cards: Access rich case cards that include embedded insights, historical context, and connections between cases, alerts, entities, and devices for a complete background on each case.

  • Automated Narratives and Task Management: Generate detailed, concise SAR or risk narratives in seconds and streamline case management with automated tasks such as assignment, prioritization, escalation, QA/QC reviews, and follow-ups.

  • Collaborative Compliance and Smart Actions: Facilitate collaboration and streamlined communication for addressing Unusual Activity Reports (UAR), Suspicious Activity Reports (SAR), and compliance audits, while enhancing operational efficiency with smart actions like document uploads, AI-generated notes, intelligent lists, and direct links to research tools or data.

  1. Oscilar AI, a Gen AI-First AML Co-Pilot: Pioneering Advanced AML Investigations and Compliance

Oscilar's AML Co-Pilot, the core of its platform, significantly enhances the efficiency and effectiveness of AML teams by delivering real-time intelligence, in-depth insights, and contextual understanding. It streamlines alert prioritization, investigations, and reporting through:

  • AI-Powered Insights: Understand case triggers, approvals, and declines with AI case summaries, and access entity insights, relationships, transaction analysis, money laundering typologies, and risk indicators via an intuitive natural language interface.

  • Automated SAR Workflows: Accelerate the SAR filing process with auto-populated case information, AI-generated detailed narratives, and one-click e-filing.

  • Natural Language Scenario Testing and Workflow Creation: Create, test, and refine AML typologies using natural language, and streamline the creation of complex workflows, behavioral profiles, and AML rules seamlessly for real-time decisioning.

  1. Leveraging Applied ML for Enhanced AML Detection & Investigation:

Oscilar harnesses applied ML to conduct continuous surveillance over entities and their transactional activities, improving detection accuracy, optimizing resource deployment, and reducing false positives through:

  • Intelligent Alert Prioritization: Leverage ML and big data analytics to identify unique AML risks and prioritize essential alerts, minimizing false positives.

  • Advanced Analytics: Utilize graph analysis for entity link analysis, point of compromise identification, and complex money flow elucidation.

  • Explainable and Fair AI: Ensure AI explainability, fairness, and governance through rigorous controls and human oversight.

  1. Transparent AML Workflows & Scenario Testing for Efficient Compliance:

Oscilar simplifies AML compliance with intuitive setup, versatile data integration, and a comprehensive approach to AML decision-making through:

  • Flexible Data Integration and Typologies: Allow the use of diverse data types and provide customizable, ready-to-use rules based on industry-standard AML typologies.

  • No-Code Rule Writing and Custom Development: Enable the creation, testing, and deployment of new AML decision rules within minutes using a no-code, natural language interface, and facilitate the building of tailored rules and models directly within decision workflows.

  • Comprehensive Analytics and High Data Integrity: Feature built-in analytics for evaluating AML decisioning performance and ensure the maintenance of the highest data integrity and governance standards for secure and compliant collaborations.

Oscilar's AI-Powered AML Risk Platform represents a paradigm shift in AML compliance, addressing the evolving challenges faced by fintechs and sponsor banks in the BaaS ecosystem. By harnessing AI, machine learning, and advanced analytics, Oscilar empowers financial institutions to navigate the complexities of AML compliance with unparalleled efficiency, accuracy, and insight.

With its unified platform for comprehensive oversight, AI-powered case management, advanced detection and investigation capabilities, transparent workflows, and scenario testing, Oscilar sets a new standard in AML compliance. As regulatory pressures mount and financial crime becomes increasingly sophisticated, Oscilar's innovative approach provides the tools needed to stay ahead of the curve and maintain a robust compliance framework.

By embracing Oscilar's AI-Powered AML Risk Platform, fintechs and sponsor banks can confidently navigate the challenges of today and seize the opportunities of tomorrow, secure in the knowledge that they have a powerful ally in the fight against financial crime.

Next Steps: How to get started with Oscilar’s BaaS platform

Ready to revolutionize your decision-making with cutting-edge AI? Take the first step towards enhanced AML compliance and fraud detection operations.

  • See our AI-Powered AML Risk Platform solution pages: for sponsor banks and for fintechs

  • Read the AI-Powered AML Risk Platform press release statement

  • Join the RiskCon Community to be part of the largest group of experts in risk, compliance, and fraud prevention.

  • Sign up for the best newsletter in the Risk, Compliance & Fraud management space below

  • Or book a demo directly to see Oscilar in action

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