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World's Top Banks Use AI to Combat Money Laundering; Searchspace, a Leader in Artificial Intelligence, to Supply Software to Top Banks to Fight Money Crime.

Business Editors/High-Tech Writers


The last two years has seen almost half of the world's top 20 banks adopt artificial intelligent software as a means for combating money laundering. Estimated as being over a 2 trillion dollar a year issue (based on IMF estimate that the size of money laundering globally is somewhere between two and five percent of the world's gross domestic product. GDP taken from, money laundering is now seen as the forefront of the fight against terrorism, with the banks in the front line. Stiff new legislation such as the USA PATRIOT Act has galvanized the introduction of this new age technology.

Traditionally the complexity of the money laundering problem was considered too hard for systems to solve. How do you detect a suspicious transaction, or sequence of transactions, in the millions of transactions that are conducted routinely? Banks had used rules systems - "Report all cash transactions over $10,000" - but this "is like stopping the smuggling of contraband by imposing a 30mph speed limit" says Jason Kingdon CEO of Searchspace, a software company at the forefront of these developments. "The approach was independent of the issue." Instead the new approach uses adaptive software to learn individual characteristics of a customer and then be able to spot and explain if it finds something suspicious. "What is normal for one person may be abnormal for another the system must be able to deal with this and explain it" says Kingdon. "the Sentinel is like an electronic employee - in that it understands context and can deal with scale operating over tens of millions of transaction per day" says Mark Greene, Global GM of Banking at IBM, a global IT company, one of the organizations delivering this technology.

TowerGroup - a Massachusetts based IT analyst owned by Reuters, say that Searchspace is now the dominant approach to this issue with over 40% of all top banks using the technology, including 9 of the worlds top 20 banks (see end for sample). Celent Communications, a Boston based technology consultancy, concur with recent research showing large institutions favor the Searchspace approach. Celent estimate that by 2006, financial institutions in the US, will spend in excess of US$0.8 Billion on Anti Money Laundering products.

The methods used are a combination of high dimension statistics and adaptive technology developed by the company. "The ability to explain actions and integrate with a business process is vital," says Dr Tony Wicks chief research scientist at Searchspace. The system automatically builds mathematical models of people's transaction behavior and as such has a way of framing a context to actions - "are they usual? Or unusual? And if unusual should we be worried about them? Using this type of sophisticated analytics at this scale is very new - typically these system manipulate terabytes of data to discern the patterns" says Dr Wicks. This is something that will characterize the use of the technology in the future, smart systems capable of making insightful judgments and actions in real time. "We really see money laundering as only the beginning - customer service is an obvious area that would benefit from more context," adds Kingdon.

With the banks gaining this level of sophistication the question is whether the regulators and reporting agencies have the resources to handle and act on this new intelligence.

About Searchspace

Searchspace is a leading provider of intelligent software - they first came to prominence with an AI system for monitoring all stocks at the London Stock Exchange for detecting trading abuses (The Economist Unit 1996), further used at the large US exchanges and Lloyds of London for insurance spirals. They developed AI systems for mobile phone fraud used by Ericsson, the large phone system company, and are seen at the forefront of smart technology for business monitoring. Formed in 1993 by researchers from the Intelligent System Lab at University College London, Searchspace is now one of the fastest growing software companies in the world (ranked in the 2002 Deloitte and Touche European 500 which is based on substantial revenue growth) with offices in the US, UK, Germany and France. They recently won PWC's, a global accounting company, Hottest Technology of the Year Award and are seen as pioneers in this new space. Searchspace system's currently monitor hundreds of millions of transaction per day with clients that include Bank of Scotland, Bank One, Barclays, Helaba, Lloyd's of London, Lloyds TSB, London Stock Exchange, The Bank of New York, The Royal Bank of Scotland, UBS, UBS Financial Services (UBS PaineWebber) and Wells Fargo. For more information visit
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Publication:Business Wire
Date:Sep 15, 2003
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