The Impact of AI on Regulatory Compliance and Anti-Money Laundering Efforts in Payment Processing

Abstract

The paper elaborates on how AI is changing the face of regulatory compliance and anti-money laundering initiatives in the industry for processing payments. This can be done with artificial intelligence tools—natural language processing and machine learning algorithms—applied in areas such as document analysis, anomaly detection, and transaction monitoring. The paper points to increased detection rates, reduced false positives, and improved regulatory reporting associated with the use of AI within the KYC process and customer due diligence procedures more generally. It identifies how AI can transform the financial crime prevention landscape while also acknowledging such challenges as explainability, bias mitigation, and ethical concerns. Finally, some potential future paths in this area, like blockchain integration, federated learning, and the creation of more sophisticated explainable AI models for compliance systems, are discussed.