Man versus machine: Balancing automation and manual reviews to strengthen risk monitoring

Matthew Mclaughlin

Journal of Financial Compliance, 2017, vol. 1, issue 1, 27-36

Abstract: In business today the speed of transactions and the risk of fraud has never been greater. In manufacturing, automation has reduced manual labour and the associated costs while increasing productivity and profitability. As the financial industry uses computer systems and automation to decrease human labour and increase transactional speed and profits, an environment is created which is ‘virtual high grass’ for modern cyber-criminals. In this paper the reader will learn that businesses will always need to improve controls to prevent the fight against those who steal as theft will never be fully eradicated. The reader will also learn that the complete elimination of ‘people’ from the process of preventing crime while also ensuring regulatory compliance will not be possible for perhaps another decade. This means the ultimate solution for compliance departments will not be man against automation or ‘machines’ as the title of this article suggests, but rather man and machine. The art of this idea will be accomplished by identifying technologies that increase efficiencies by eliminating manual searches without unacceptably increasing risk. Although highly credentialled computer systems experts will always need to be on staff, so too will smart executives and investigators who have successfully fought against those who would launder ill-secured gains or use the internet to steal money or products as a way of life. Finding the right balance will be crucial.

Keywords: automated; risk-mitigation; AML; fraud; identity verification; transaction authentication (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2017
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