The AI Book

CHAPTER 61Robocop on Wall Street

By Michael Berns¹

¹Director AI and FinTech, PwC

Robocop on Wall Street – this futuristic term coined by a journalist to describe one of the leading RegTech vendors sums up the revolutionary advances in artificial intelligence (AI) which are rapidly and seamlessly bridging the gap between legal/regulatory requirements and technology.

Setting the Scene – The Why

Let’s start with “why”. Why is AI such a powerful tool for legal and compliance use cases? Financial crime has been a thorn in the side of financial services firms ever since financial markets were created, long before the financial crisis. Post crisis, the shock to the entire system and the increased regulatory scrutiny has brought a lot of new financial crime cases to light.

Reviewing Figure 61.1, it is clear that:

• The fines in the early years were low (even during 2002–2006 they did not exceed GBP 25 million per year).
• They did not immediately peak after the financial crisis, but only a few years later in 2014–2015, as regulators first prioritized monitoring the survival of banks and tightening up regulatory requirements such as Basel III/IV. When some of these big cases like LIBOR manipulation were uncovered, it became clear that this practice had been going on since the nineties, but no fines had been imposed in earlier years.¹

Figure 61.1 UK regulatory fines (Financial Services ...