Targeting fraud with AI

Key Concepts

• Agentic AI: Autonomous AI systems capable of performing complex tasks and workflows with minimal human intervention.
• Enhanced Due Diligence (EDD): A process used by financial institutions to assess and mitigate risks associated with high-risk customers or transactions.
• Sanction Screening: The process of checking customers and transactions against government-mandated lists of prohibited entities or individuals.
• Financial Crime Workflow Automation: The use of technology to handle repetitive, "checkbox" compliance tasks, allowing human investigators to focus on complex criminal patterns.
• AI Arms Race: The competitive landscape where criminals use AI to scale and perfect scams, while financial institutions use AI to detect and prevent them.

---

1. The Landscape of Global Financial Crime

Nasdaq Verafin reports that global financial fraud results in over $500 billion in annual losses. In Canada specifically, fraud-related losses have reached $3.4 billion. Stephanie Champion, EVP of Nasdaq Verafin, highlights that the rise in these scams is directly linked to the proliferation of AI. According to a survey of 500 financial institutions, over 90% attribute the increase in sophisticated scams to criminals leveraging AI to scale their operations and perfect their fraudulent techniques.

2. Nasdaq Verafin’s AI Solutions

Nasdaq Verafin, a company founded in St. John’s, Newfoundland, and acquired by Nasdaq in 2021, has introduced "agentic agents" to combat these threats.

• Current Adoption: Since launching the first two agents late last year, 650 financial institutions have adopted the technology.
• Primary Use Cases: The initial tools focus on Sanction Screening and Enhanced Due Diligence (EDD). These areas were chosen because they are traditionally resource-intensive and involve repetitive, "checkbox" compliance work.
• Performance Metrics: The implementation of these agents has resulted in a reduction of up to 50% in the time investigators spend on EDD reviews.

3. Strategic Vision: Automating the Workflow

The core objective of Nasdaq Verafin is to automate up to 90% of a financial crime investigator's workflow by the end of the year.

• Methodology: By automating routine compliance tasks, the system shifts the human workload from administrative data entry to proactive threat hunting.
• Operational Impact: This allows investigators to focus on complex crime rings and systemic threats rather than individual, low-level alerts.
• Efficiency vs. Headcount: The technology provides a scalable solution that allows financial institutions to manage increasing transaction volumes and criminal sophistication without needing to proportionally increase their headcount.

4. Competitive Positioning and Future Outlook

• Canadian Competitiveness: Despite being a global player, Nasdaq Verafin maintains its roots in Newfoundland. Champion asserts that Canadian banks and fintechs are as well-positioned as any global institution to combat financial crime, having successfully scaled their solutions from local credit unions to the world’s largest banks.
• Investor and Institutional Perspective: Beyond risk mitigation, the adoption of AI is viewed as a long-term efficiency opportunity. By reducing the compliance burden, banks can achieve better operational results and potentially improve shareholder value by reallocating human capital toward high-value, proactive crime prevention.
• Future Roadmap: The company plans to continue modeling and adapting its agents to the evolving threat landscape, with the ultimate goal of creating a fully automated workforce for financial crime detection.

Synthesis

The fight against financial crime has evolved into an AI-driven "arms race." Nasdaq Verafin’s strategy centers on the transition from manual, reactive compliance to automated, proactive intelligence. By leveraging agentic AI to handle 90% of routine workflows, financial institutions can effectively "root out" criminals from the financial system while simultaneously achieving significant operational efficiencies. The success of this approach is evidenced by the rapid adoption among 650 customers and the measurable reduction in time spent on high-volume compliance tasks.