David Caruso, Vice President of Financial Crime Compliance at WorkFusion talks about the various ways in which organizations can use AI to fight financial crimes more effectively in this fintech catch-up:
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Hi David, tell us about yourself and your time in Fintech.
My time in Fintech centers on prior roles as an advisor/consultant and an early Chief Customer Officer of a Regtech firm founded in 2014. As a consultant to traditional financial institutions and Fintechs, I helped each better understand, design, build, and operate Anti-Money Laundering (AML) and Sanctions compliance programs. For banks, I helped them develop protocols to provide services to Fintechs, and for Fintech, I helped them build programs to satisfy AML requirements placed upon them by their banking partners. As we all know, this issue is not solved and remains a top focus of the industry, policymakers, and regulators.
My Regtech experience exposed me to the challenges of unseating long-standing software incumbents despite using advanced technology like Machine Learning and AI that was superior to decade-old approaches. This experience was a great example of the friction between traditional finance and emerging technology, even in financial crime compliance.
Currently, at WorkFusion, in my capacity supporting revenue, product, and marketing, I help convey to both traditional financial institutions and Fintechs of all types that the use of AI in financial crimes is not a future hope but is here now and delivering significant improvements to operations, customer experience, and costs.
What about today’s state of financial crimes is most disorienting?
In December 2024, the financial crime compliance industry is waiting to see what regulatory changes the new Administration will make. Interestingly, in the past few weeks, critical regulatory issues for Fintechs emerged in discussion among the general population. Discussing topics like “debanking” and how the new Administration will approach cryptocurrencies and partner banking is disorienting for several reasons. One is that widespread discussion of these issues among non-financial crime compliance types is quite noticeable and unusual. Drawing the attention of those likely to influence regulatory agency personnel appointments and policy makes financial crime compliance professionals hopeful. Not hopeful because one policy will win over another, but optimistic for clarity and consistency of policy and its application by regulators. Uncertainty about rules and how they are applied hinders financial crime compliance teams, which can ironically increase risk and harm the Fintech industry’s growth.
How do you feel fintech innovators and users can capitalize more on AI to fight financial crimes?
The purpose of financial crime compliance is to identify, investigate, and report suspicious activity. Finding suspicious activity among the trillions of dollars moving daily through the global financial system is a massive challenge. Unfortunately, outdated transaction and customer screening and monitoring systems make that challenge more difficult. The systems struggle to identify suspicious activity, and they flood financial crime compliance workers with endless low-value, non-suspicious matters that drain their time and attention (and, if not appropriately managed, will draw the ire of regulatory authorities). In a perfect situation, AI would catapult over the low-value work and pinpoint the suspicious activity. That is not yet feasible. But what is happening today is that AI is now substantially reducing the work time needed to resolve the endless flow of low-value customer and transaction “alerts.” By automating many of the manual and repetitive tasks compliance analysts have suffered through for decades, AI is freeing up millions of hours a year for investigators to focus on actual risky activity and enable financial crime compliance executives to better allocate people and budgets.
Read More : Gen AI and Its Impact on Fraud and Identity Verification
Can you tell us a little about WorkFusion’s AI agents and how they enable end users to fight financial fraud and crime?
WorkFusion uses AI Agents to help financial crime compliance teams at financial institutions and banks automate much of the work in resolving customer KYC screening and transaction monitoring alerts. As the professionals who do this work can attest, many of the steps and procedures required are repetitive, and the decision-making follows a predictable pattern based on similar criteria. For humans, this work can feel monotonous. Unfortunately, we know that spending hour after hour on this type of work leads to errors and inconsistency. This is work where AI Agents excel. With open models that are easy for financial crime executives and regulators to understand, WorkFusion AI Agents gather data, apply analysis, and present fully documented decisions to financial crime workers who quickly validate recommendations. Our AI Agents also identify matters that require human judgment and escalate those for additional review to the financial crime investigators. This is precisely the work people should do — focusing on what matters most.
A few thoughts on the future of fintech and AI before we wrap up?
Financial crime compliance AI tools will play a significant role in growing Fintech businesses and the banks that provide them services. The financial crime risks — both real and perceived — that Fintechs pose in the marketplace are partly what hinders growth. All stakeholders, including regulatory authorities, will see how AI strengthens financial crime compliance by making work more transparent, consistent, and cost-effective. This won’t altogether remove the concerns around financial crime. After all, criminals will not stop looking for ways to manipulate the financial system. However, using AI as a primary partner for skilled compliance workers and investigators will strengthen banking and Fintech, building the confidence needed to realize the market’s full potential.
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WorkFusion is a pioneer in AI agents for financial crime compliance (FCC). Its AI Digital Workers are purpose-built workers that augment compliance teams in level 1 analyst functions and alleviate the tedious tasks associated with anti-money laundering (AML), adverse media monitoring, sanctions screening alert review, customer onboarding, Know Your Customer (KYC), transaction monitoring (TM) and customer service.
David Caruso is Vice President of Financial Crime Compliance at WorkFusion, where his in-depth expertise with anti-money laundering (AML) and sanctions compliance programs complements WorkFusion’s mission to help financial institutions combat financial crime and transform compliance programs with its AI Agents. In his role at WorkFusion, David will help convey to both traditional financial institutions and Fintechs of all types that the use of AI in financial crimes is not a future hope, but is here now and delivering significant improvements to operations, customer experience, and costs.
