In the wake of Russia’s invasion of Ukraine, the U.S. and other Western democracies united to levy the harshest package of sanctions ever imposed on a single nation. Yet, despite the strategic resolve driving their efforts, these governments may lack sufficient resources to fully enforce the sanctions.
At the heart of the problem lies a critical shortage of skilled personnel within the agencies tasked to enforce the sanctions. Faced with the most comprehensive sanctions in a generation and a thinning workforce to implement them, government officials are left with very few options but to take a page from the private sector and integrate AI technology into their investigation operations.
AI’s speed, scope, accuracy and efficiency would optimize sanction enforcement efforts. The technology’s capacity to analyze vast amounts of data and rapidly identify criminal activity and potential risks make it a formidable tool in the enforcement of financial regulations, including international sanctions.
Challenges of scaling Russian sanctions
President Joe Biden recently announced a major scaling-up of Russian sanctions, targeting two of Russia’s largest financial institutions — Sberbank and Alfa-Bank — along with an expanded list of individuals tied to the Kremlin. These joined the already voluminous list of sanctioned entities that were targeted directly or severely limited through exclusion from SWIFT, the global payment system for cross-border trade.
But the West’s capacity to maintain, let alone expand, its current sanctions program is already experiencing significant gaps and limitations. In early 2020 — at the onset of the Coronavirus pandemic — the U.S. Government Accountability Office released a report describing how several U.S. agencies responsible for enforcing sanctions were short-staffed and have been unable to fill enough full-time positions to operate effectively for years.
Without adequate human or technological support, regulators may be compromised in their efforts to counter the bad actors working to circumvent the sanctions. Many of them may be counting on the possibility that overwhelming mountains of data in the global financial system could slow down or block regulators’ actions. If enforcement teams adopt advanced AI technologies to boost sanctioning efforts, however, the same violators would soon realize the unfavorable odds in making such a wager.
Risk discovery, detection speed and accuracy
Risk detection lays the groundwork for all sanction enforcement actions. Moreover, detection speed and detection accuracy, via the elimination of “false positives,” play a critical role in determining the probability of success.
Here’s where the case for AI is most compelling. AI can help private financial institutions more than double the number of risks detected, reduce false positives by 60%, and increase the pace of risk detection by 40%. Through advanced machine learning technologies, AI systems are capable of analyzing large, complex, noisy and incomplete datasets (a.k.a., topological data analysis) to identify the latest and riskiest criminal behaviors. AI detects anomalies in payments and transaction patterns in a discreet manner that doesn’t depend on interrogations and won’t tip off the institutions, companies, or individuals seeking to sidestep sanctions.
AI can also help analysts develop behavioral models based on past sanction violations or similar financial crimes. Based on those models, it can analyze large volumes of data from a variety of sources to automatically pinpoint current violators. It can even identify emerging threats, to uncover the “DNA” of complex crime behaviors on its own.
Equally important is the capacity of an AI application to present its findings in an easy-to-understand format suitable for end users that are not data scientists or IT specialists. And all of this analysis can be executed in just a fraction of the time it would take most trained investigators — a crucial advantage in an endeavor in which time is of the essence, and there’s already an enormous drain on resources, time and capital.
AI could be a game-changing ally for regulatory and law enforcement agencies in their efforts to thwart sanctions violators. And, with political relations with Russia evolving by the day, if not the hour, the sooner support is brought in to help track new and existing sanctions against the country, the better.
Raj Srivatsan is Vice President, Civilian at SymphonyAI.