AI Supports Compliance, but Can't Replace Human Oversight

The financial industry has been slow to understand how artificial intelligence (AI) can support compliance efforts in cryptocurrency.

Pierre Gérard, CEO and co-founder of Scorechain, points out that many people believe AI will either replace or be too unpredictable for regulated activity. However, he argues that the truth lies somewhere in between.

Gérard explains that the current problem is 'noise', sanctions screening systems throwing off false positives at a rate of 95%, and transaction monitoring not far behind. This leads to compliance officers spending most of their time clearing alerts that were never risks, dismissing name matches on common surnames and reading adverse media hits that turn out to be about different people.

Automation can help by compressing evidence so that compliance officers can make informed decisions in minutes. However, Gérard stresses that AI should not replace human judgment, but rather support it as a separate layer. The alternative, relying solely on AI, is 'dangerous' and would require institutions to explain and stand behind their decisions.

Gérard's company, Scorechain, has added AI as a separate layer to its compliance tools, allowing analysts to focus on judgment rather than triage. The model is only as good as the data it is fed, and blockchain analytics play a crucial role in attaching identity and risk to raw on-chain activity.