James Saunders | Co-founder | CTO | RelyComply | mail me |
Flashy Artificial Intelligence (AI) applications like generative art and self-driving cars dominate headlines. Still, AI and Machine Learning (ML) play a quiet background role in our daily lives. Nowhere is AI’s growing influence more apparent than in financial services. AI systems are increasingly protecting both the financial system and its customers.
As you go about everyday banking, AI and ML continue to appear more frequently. These technologies drive systems that alert your bank to unusual transactions and flag potential fraud risks. They also power the models banks use to decide whether to approve a home loan. Every time you use a banking app or card, a web of algorithms runs in the background to make it happen.
AI’s growing influence in RegTech and compliance
When you log in to online banking, sophisticated systems monitor login behaviour, device patterns and network locations. These real-time checks help ensure it is really you, not a fraudster halfway across the world. Similarly, when you send a payment or pay a utility bill online, intelligent processes assess your behaviour for unusual activity.
One of the most important applications of digital technology today lies in Regulatory Technology (RegTech). These solutions support compliance with Anti-Money Laundering (AML) and Know-Your-Customer (KYC) regulations.
Such systems help financial institutions comply with regulatory requirements like those set out in the Financial Intelligence Centre Act (FICA). This Act mandates the identification and verification of all customers. The goal is to prevent financial crimes, such as money laundering and terrorist financing. AI’s growing influence in RegTech enables faster, more accurate, and more scalable compliance.
The global effort to fight financial crime
While ID verification and security checks might seem inconvenient to you as a customer, they are part of a global effort. This effort aims to build a safer and more transparent financial system for everyone.
The goal is not only to protect individual users but also to disrupt organised crime and illicit financial flows. This work is especially important in the context of South Africa’s greylisting by the Financial Action Task Force (FATF) in 2023. Greylisting resulted in tighter scrutiny of local financial flows. However, it also sparked innovation, particularly in RegTech solutions.
Criminals involved in Illicit Financial Flows (IFFs) have developed sophisticated methods to bypass bank security. These flows involve the proceeds of crime or funds used to support illegal activities. Companies like ours develop technology to stop these criminals. We do this while also helping banks manage costs and minimise inconvenience for everyday users.
Our systems enable rapid checks when a bank verifies a new customer or a payee. These checks include screening for politically exposed persons, sanctioned individuals, or residents of countries with poor KYC and AML standards. They also help confirm a person’s identity quickly to prevent ID fraud. This is another example of AI’s growing influence in financial security.
Modern AML and KYC platforms use real-time risk detection to screen each transaction for anomalies. For example, if a transaction matches patterns found in known criminal networks, the system flags it immediately. If it appears to be funded by unexplained income, a bank investigation is triggered.
AI also helps reduce false positives, where legitimate transactions are incorrectly blocked. Older systems often erred on the side of caution, which frustrated customers. Today’s AI-powered tools are more accurate. They reduce the chances of unnecessary delays and improve customer satisfaction.
AI’s growing influence on customer onboarding
This dual benefit of fighting crime and enhancing user experience makes AI-driven RegTech tools valuable in the modern compliance landscape. This is what FICA compliance looks like in the digital age. Banks can identify and verify their customers while keeping bad actors out.
Here is how the process typically works when you apply online for a financial product:
- You choose the product and begin the onboarding process.
- The system prompts you to take a selfie, checking for “liveness” to confirm you are a real person, not a spoof or deepfake.
- The platform offers real-time feedback to help you capture a usable image, reducing frustration from blurry or dark photos.
- Your image is matched against government records and other trusted data sources. This helps verify your identity and any risk factors.
- All of these steps happen within two to five seconds. No manual paperwork is required.
This process reflects AI’s growing influence in reducing administrative burden while improving security.
Over the past decade, this technology has transformed financial services. The need to physically visit a bank branch to show your ID and proof of address is quickly disappearing. Today, nearly all of it can be done online. In addition to saving time, this shift has opened the market to new players like neobanks and fintech firms. As a result, consumers benefit from more choice, competition, and financial inclusion.
In conclusion
The economic impact of this technology is also significant. By making it harder for criminals to launder money or impersonate others, AI-powered compliance tools help create a more secure financial environment. AI’s growing influence supports transparency and accountability at every level of the system.
In South Africa, the fight against corruption, organised crime, and money laundering is critical. Restoring investor confidence depends on strengthening financial security. Each time a money launderer is stopped or a suspicious financial flow is identified, we move closer to a stable and trusted economy.
