Featurespace has secured government funding from the UK and the US to build an artificial intelligence (AI) system to help banks and payments service providers (PSP) detect financial crime.
The fraud and financial management firm’s solution is intended to help PSPs and banks tackle financial crime, including cross-border money laundering, application fraud and authorised pushed payment (APP) fraud.
The money comes from the privacy-enhancing technologies (PET) prize challenge, a new UK-US scheme aimed at transforming financial crime prevention.
The funding will allow Featurespace to develop privacy-preserving solutions that allow AI models to be trained on sensitive private data without organisations having to reveal, share, or combine their raw data.
Dr David Sutton, Featurespace’s director of innovation, commented: “This type of privacy-preserving collaborative AI is a hard problem that no-one has yet solved.”
Laurie E Locascio, undersecretary of commerce for standards and technology and director of the US National Institute of Standards and Technology, added: “AI is driving rapid technology change that is based on ever increasing amounts of disparate data, making privacy enhancing technologies increasingly important.”
As financial crime is likely to rise in 2023, more advance tech solutions to fight it are needed.
Trade body UK Finance predicts an “epidemic of fraud” happening, due to increases in APP fraud, which totalled £580m lost in 2021, representing a 40% year-on-year increase in this type of crime.
Additionally, the United Nations estimates that money laundering costs up to $2t each year, undermining economic prosperity and financing organised crime.
The prize scheme was launched early this year by Innovate UK and National Science Foundation in the US.
From 76 entries across the US and the UK, 12 teams have been selected as part of the first phase of the PET prize challenges.
Selected teams will participate across two challenges: using PETs to improve detection of financial crime, forecasting an individual’s risk of infection during a pandemic, or a solution that does both.
The aim of the project is to make money laundering across borders harder.
Dr David Sutton added: “If you make it harder to launder money, you make criminal activities less profitable. This will benefit businesses, society and consumers.”
Cambridge-based Feauturespace, has until 24 January to build its AI prototype. If successful, it will be showcased at the second Summit for Democracy in the US next year.