Global Regulation, Local Solutions Emerging Themes 2020 - Page 82



DIGITAL
EMERGING THEMES 2020
Financial institutions are now very familiar with
automated surveillance systems designed to
monitor the behaviour and communications of
their staff and identify instances of suspected
market abuse or other misconduct at work. The
threat of large fines and criminal prosecution
may deter some rogues, but those seeking to
operate below the radar will always find more
creative ways to operate.
This presents a challenge for firms, but new
technology may be the answer. Employee
surveillance has already seen significant
advances with the widespread use of
communication monitoring tools to flag
particular keywords and phrases and the
application of pre-specified scenarios to reveal
specific types of misconduct – but what if it
were possible to get into the minds of how
employees operate?
PREDICTIVE
TECH
NEXT-GEN AI IS HELPING
COMPLIANCE MONITOR
ROGUE OPERATIONS
A new generation of artificial
intelligence (“AI”) and machine
learning technologies utilises
communications data to predict
the behaviour of employees
and flag rogue operations in
real time. These advances can
greatly benefit financial services
compliance teams, as firms
harness the very real value that
these technologies can deliver in
identifying problematic conduct
at an early stage.
Those seeking
to operate below
the radar will
always find more
creative ways
to operate
82/
An employee’s behavioural changes can now
be identified through AI and machine learning,
analysing an individual’s communications
to identify patterns and develop a smart
algorithm. This goes beyond direct matching
for specific content, which can often result in
compliance teams being impeded by numerous
“false positive” results. AI is able to detect
the tone of an inappropriate or suspicious
communication, and other subtle signals such
as the time of day a communication is sent.
Data models and “profiles” about the behaviour
of a trader are developed. As the trader alters
their communication style the profiles reflect
this, continuously learning in real time. In turn,
monitoring rules and triggers can be updated,
allowing the AI to proactively flag “smoking gun”
communications as they occur, and enabling
legal and compliance teams to identify issues
and take protective actions before an
issue escalates.
Our forensic technology team is seeing the
deployment of complex AI technologies
becoming more prominent in the financial
services industry and across other sectors.
These tools are also starting to be incorporated
into document review platforms, which have
always contained a level of built-in analytics.
The technology is being used for discovery and
unstructured data investigations, leading to
quicker responses and significantly lower costs
in locating any problematic conduct.
The technology is developing so rapidly that
internal stakeholders should be having regular
conversations about the latest use of AI
technology and trialling what is available in
order to streamline surveillance activities and
make them more effective.
JASON ALVARES
Forensic Technology Manager,
London
SIÂN COWAN
Associate,
London
/83

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