Electronic Communications Monitoring: Leveraging AI for More Effective Surveillance

The proliferation of electronic communications channels available to financial professionals and their clients has created a headache for compliance teams charged with mitigating against market abuse, insider trading and other illegal activities.

In an era of heighted regulatory scrutiny, compliance teams are finding it challenging to put in place the appropriate systems and processes, particularly with the mainstream acceptance of ‘work from home’. Meanwhile, they are trying to leverage AI to help deal with the rapidly growing volumes of messages and alerts, and alarmingly high false positive rates.

This report – based on a survey commissioned by Saifr and conducted by A-Team Group – sets out to explore the current perception of monitoring electronic communications channels in trading and investment management. It offers insight into how compliance teams are addressing e-comms surveillance today, how they are organizing their surveillance teams, and possible use-cases for AI in the segment.

By reading this report, you will learn:

• How false positives remain a pervasive and significant problem, with practitioners reporting rates often exceeding 90% of alerts, making it a primary driver for firms seeking new systems and system improvements.
• How compliance team review staff are spending 40-60% of their time resolving alerts in addition to administrative tasks. Reviewers and managers often dedicate a large portion of their time (sometimes 40-60%) to these activities. The result is diversion of resources from genuinely risky activities.
• How, despite existing technology – much of which is old and outdated – the financial markets surveillance process remains resource-intensive and lacking contextual insight, creating significant challenges in particular in monitoring video communications and encrypted or off-channel messaging apps.