Hunting Financial Criminals With AI

Criminals With AINo application in production and operation today is totally clear of the accusation that it is not really intelligent because it possesses no genuine cognitive function. That does not prevent some applications being referred to as artificially intelligent and nor does it prevent them from producing results. The identification of criminal operations in finance is one such area of operation.

What the software under discussion does is to look at activities and behavior and compare them with various norms – it may be the normal behavior of the person being observed, the normal behavior of a standard group, or a set of behaviors and activities defined by the writers of the software as a norm of any description. This kind of software has been used to track sex traffickers and to track terrorists; it may be in financial systems that it produces its greatest payoff, at least in measurable cash terms.

In stock exchanges and stock marketing systems throughout the world, the amount of data being analyzed is far greater than even a small army of human analysts could examine with any thoroughness and this is the great strength of “AI” systems (even if, having no cognitive or decision-making competencies, the systems don’t actually deserve the description of artificial intelligence).

The data in question takes in the chat and email accounts of traders and compares what is going on there with trades actually entered into by the trader. Indications of market manipulation, insider trading and other financial crimes thrown up in this way are referred to human agencies for examination with a view to prosecution.

As well as law enforcement agencies, the traders’ employers – the banks, brokers and other agencies for whom they work – have an interest in identifying both criminal activity and behaviors which, though not criminal, involve risk-taking at a level unacceptable to the institution for which the trader works. It could be argued that the disaster that overtook Barings Bank as a result of the trades entered into by Nick Leeson would not have happened had Barings had such software in place.